Let’s say we have two companies and that both their stocks are selling at the same price. Company B has three times the market capitalization of Company A, yet Company A has filed to buy Company B. Assuming that all else is equal and that this is all public information, but we guess that Company A will pay a slight premium to buy Company B in order to close, which stock would you invest in before the deal closes?
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Company B shares should be bought as a trade. The premium may be “slight” but it place Company B “in play.” Other bidders, in a normal environment, will bid or entertain an offer to B.
Despite all the info you have provided, in the real world of investing and trading, the stock to buy is that of the company to be bought. Once the deal is announced, the probability is that the acquiring stock will go down and the bought company’s stock will rise.
usually the company being bought. Sometimes deals fall through though and stock takes a dump. look for more of a sure thing like the wrigley deal being backed by Buffett.