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When one company buys another company outright.
Why It Matters
In an acquisition, the buyer typically pays a premium (20-50% above current price) to convince shareholders to sell. If you own the target company, you usually make money fast. The acquiring company's stock can go either way - up if investors like the deal, down if they think the buyer overpaid. Microsoft buying Activision for $69 billion was the largest gaming acquisition ever.
Key Points
- Target shareholders typically get cash, stock, or a mix
- Acquisition premium: typically 20-50% above pre-announcement price
- Deal risk: acquisitions can fall through (regulatory blocks, financing issues)
Related Terms
Common Questions
When one company buys another company outright. In an acquisition, the buyer typically pays a premium (20-50% above current price) to convince shareholders to sell. If you own the target company, you usually make money fast.
In an acquisition, the buyer typically pays a premium (20-50% above current price) to convince shareholders to sell. If you own the target company, you usually make money fast. The acquiring company's stock can go either way - up if investors like the deal, down if they think the buyer overpaid. Microsoft buying Activision for $69 billion was the largest gaming acquisition ever.
Target shareholders typically get cash, stock, or a mix
Acquisition premium: typically 20-50% above pre-announcement price
Deal risk: acquisitions can fall through (regulatory blocks, financing issues)