Hello redditors can anyone explain or justify how merger is beneficial to shareholder and why so much enthusiasm?

2 comments

1. there may be some little trading benefit from mergers, but sure it is good both for the smaller company as well as the bigger one. the smaller company will have access to resources it never had before and the bigger company will have new business and resources added

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2. It’s about synergy. 1+1 might become very well 3 or 11 at best, not 2.

   For old shareholders of weaker side, it’s an opportunity because their investments are now more secure than before and for old shareholders of stronger side, it’s about synergy. Their company or new entity becomes stronger than before. It might be just a perception or there be an amalgamation of technical know-how and/or market share etc.

   For new investors, it’s mostly about trading gains as far as I can see e.g. if there’s a huge gap between market prices of two companies and swap ratio is such that it puts weaker side into advantage, then traders will of course see the opportunity there.

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