Stupid question about deal
Question about a deal... if it states
"Newmont Mining, the biggest gold producer in the United States, said on Thursday that it had agreed to acquire Fronteer Gold of in a deal valued at more than $2 billion. "
Does it mean that the deal went through already and totally completed? or there's still potential to fall apart?
There's also a paragraph after stating
"The deal requires agreement from at least 66.6 percent of Fronteer shareholders at a vote expected to be held in April, as well as court and regulatory approvals. The agreement includes an $85-million break fee and gives Newmont a right to match any competing offers that may arise. "
So even though it's announced in Feb, it mentioned it needs approval from shareholders in April, means there's still room to fall apart. Is that correct?
You answered your own question
i don't know which one... went through already or fall apart?
fall apart
You're correct, the announcement comes before the deal is finalized. Companies have come to a principal agreement. In this example, shareholder votes come in to play. In other "deals" obstacles like antitrust may arise.
but usually say Adviser A for Company A, and Adviser B for Company B have done all their work already right? There's no more need for the Financial advisors to come in play anymore since now it's all upto the shareholders now?
Well that is correct - the financial advisors would have done most of their work by done, but the clients may use them on and off during the whole announcement to completion process (for example, for preparing a presentation for the shareholders' meeting etc etc). Also, most of the fees (except the retainer component) is payable only if the deal completes. So the bankers would not have been counting their bonuses just yet
Usually, whenever a deal is announced, it is still in need of shareholder approval, anti-trust approval, FTC, etc. That is if the company is public. If the company is private, they can come out with the deal whenever they want. Since the company is public, they MUST get shareholder approval for the deal to finalize. This is basically Stage 1 in merger arbitrage.
Get it or na?
i get it, but at which stage do the Financial advisors (Investment banks) do their work as performing their DD and valuations? when the deal is announced, do the financial advisors do any further work, or are they just behind the scenes and it all depends upto the shareholder at that point?
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