Business & Finance

what happens to share prices when a company gets taken over?

msmith2468 Wed 24/09/08 11:04

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AKMild
Wed 24/09/08
12:16

They usually refelect the terms of the takeover offer, e.g. if a company is to be taken over for £5.00 per share then the target company's shares should trade on or around £5.00.

Sometimes, a company is taken over and paid for in shares of the new company rather than in cash, but the shares of the target company will still have been valued for the purposes of the offer.

The target share price can be adjusted if, for instance, there was a dividend payment due before the takeover, or simply for the time value of money, if the takeover is not going to happen in the short term.

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