Why do so many companies overpay?HF
I was reading over the Kraft Cadbury deal and found an article that "justifies" the 50% premium to Cadbury's market share price that Kraft is offering http://dealbook.blogs.nytimes.com/2010/01/19/cadbury-kraft-a-win-win-deal/
So I am wondering, why do so many companies overpay for acquisitions?
If the market prices a stock at a certain value, why would a company pay more? Does the company see a better story than other investors do? Maybe it is the prospects of "growth" and "better margins" but why overpay for these?