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Examine whether the use of cash reserves for the acquisition of other companies would increase a Company’s share price. Is this a good alternative to share buy-back?
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Examine whether the use of cash reserves for the acquisition of other companies would increase a Company's share price. Is this a good alternative to share buy-back? The assessment of an expansion as such from a firm attaining another enterprise relies upon the circumstances of the acquisition made and the environment in which the firm operates. The 1980's situation where there was a boom in takeovers and mergers boom provides a good source of analysis in this subject matter. There is no uncertainty about the effect of leveraged acquisitions on the shareholders of companies that were takeover targets, from historical data on this subject matter. By the end of the 1980s, shareholders in leveraged acquisitions gained significant wealth. Analysts disagree only over the amounts gained. It seems that on average, stock prices increased 20 percent over pre-announcement prices for mergers, 30 percent for tender offers, and 20 percent to 37 percent...
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