Effect of Takeover Rumors on Peers
Hey guys,
I'd like to pose a question. In the event of circulating acquisition or merger rumors, what is the effect on the share price of the target's peer?
I'd speculate that if the two companies are direct competitors, then the rumors of the takeover would cause retail (noise) investors to flock from the peer to the target company to cash in on the premium. Increased selling of the peer's stocks would cause the price to take a small dip.
Is this logic sound?
This is interesting. Have you tried looking up movements in share prices due to any recent deals? Say Kraft?
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