when trying to figure out what one company paid for another, when the buyer was paying with SHARES of their company… is it fair to use the opening price of the shares after the acquisition was announced or should you use some average? Is there an industry standard practice for this? thanks
there is no way to figure out the actual value of the shares used in the acquisition? gotta be in a press release or something…
If you want to measure the true value of the consideration paid to the target co.'s shareholders, I would use the acquiring company’s stock price on the date the acquisition closed.
^ | which price? opening, closing, daily average? depending on the change in price over the day and the number of shares used in the acquisition, the differences can be pretty large.
depends on the merger agreement/tender offer. if it is a fixed exchange ratio (ie 1.5 acquiror shares for each target share), then the final closing price of the acquirors stock would be the most appropriate, if it is a fixed value (ie $30 per share) then you have the answer - it’s $30. note that will also depend on if there are collars used…
Ok…here’s the deal. A private company announced it would acquire a public company, 1 for 1 with shares of the private company’s stock in exchange for the public company’s stock(the company being acquired). Immediately following the acquisition, the private company began trading on the stock market. It opened at 1 price, it closed at another price and over the following months the price trended down. Is the “opening” price the day after acquisition closed the best representative for the cost of the acquisition?