In the arena of the capital market, every acquisition of control is like a power game with undercurrents. When the major shareholder changes hands, the market is instantly turbulent, and the stock price may soar or plummet - what is the logic behind this? How does the acquisition of control affect stock price trends? How can investors capture market signals in advance?
Today, Goheal will take you to deeply interpret the impact of the acquisition of control, so that you will no longer be a "leek", but stand at the forefront of the capital wave!
Acquisition of control: the "super catalyst" of the stock market
What is the acquisition of control? Simply put, it means that the capital tycoons have set their sights on a listed company and decided to buy enough shares to gain the right to speak or even control.
Key point: Control ≠ 100% equity!
Many capital players do not pursue 100% control, but take control of the board of directors with 30%-50% equity to truly influence the company's operating direction.
So, when the acquisition of control occurs, how will the stock price go? There are mainly three situations:
1. The market is optimistic about the new shareholder, and the stock price soars
If the new shareholder is an industry leader or has powerful resources, such as Musk's acquisition of Twitter, investors often believe that the company will have more growth potential in the future, causing the stock price to soar.
2.Market panic, stock price dive
If the source of the new shareholder's acquisition funds is opaque and the background is complicated, or the market is worried that it will conduct operations that are not conducive to small and medium shareholders (such as high-leverage acquisitions and malicious management cleansing), the stock price may fall off a cliff.
3.Stock prices fluctuate in the short term, and execution is important in the long term
Some acquisitions of controlling rights have caused stock prices to rise sharply in the short term, but if the subsequent integration is not strong and the company's operations fail to improve, the stock price will eventually return to rationality.
Goheal Comment:
The rise and fall of stock prices depends on market expectations. M&A is only a catalyst. What really determines the stock price trend is the operating ability of the new controlling party.
Classic case: How does the acquisition of controlling rights change the stock price?
Case studies can help us understand more clearly the impact of acquisitions of controlling rights on stock prices.
[Successful Case] AT&T acquires Warner: Stock price soars
In 2018, the US telecom giant AT&T acquired Warner Media for $85 billion. The market generally believed that this deal would enhance AT&T's content ecology and promote growth. As a result, after the acquisition news was announced, AT&T's stock price rose all the way, and the short-term increase after the acquisition was completed exceeded 15%.
Market logic: capital is optimistic about synergy, the acquirer's financial stability, and investor confidence is enhanced.
[Failed Case] TCL acquires Alcatel: Stock price plummets
In 2004, TCL acquired Alcatel's mobile phone business at a "symbolic price" of 1 euro. The market initially thought it was a "leak", but after the acquisition, TCL faced problems such as high operating costs and low brand recognition in the European market, and ultimately lost 2.4 billion Hong Kong dollars.
TCL's stock price fell by more than 30% within one year after the acquisition, and investors voted with their feet.
Market logic: cultural conflict, integration failure, and market confidence collapsed.
Goheal Comment:
The success or failure of an acquisition is ultimately reflected in the stock price. If the market is not optimistic about the new controlling party's operational capabilities, a fall in stock prices is almost inevitable.
What should shareholders do after the acquisition of control?
If the company you hold is about to be acquired, how should you respond?
A.See who the new controlling party is
1. Industry leader (such as Apple acquiring a small company): buy!
2. Capital operation players (may operate with high leverage): wait and see cautiously!
3. Insolvent speculators: sell decisively!
B. Observe the M&A method
1. Cash acquisition: The new owner is strong and the stock price is supported.
2. Stock exchange merger: See if the stock value of the new shareholder is worth changing!
C. Pay attention to the subsequent integration
1. Is the new management replaced?
2. Is the business model adjusted?
3. Is the financial situation deteriorating?
Goheal reminds:
For companies that have successfully acquired, the stock price may continue to rise; but if the integration fails, the stock price will fall more than before. Investors should keep a close eye on financial reports and market trends!
Future trends: Will control acquisitions become more frequent?
From the perspective of the global market, the frequency of control acquisitions is increasing, especially in the following areas:
1. Technology industry: M&A in AI, semiconductors, and cloud computing is accelerating (such as Nvidia's failed acquisition of ARM).
2. Energy industry: New energy companies are acquired by traditional energy giants.
3. Financial industry: Investment companies and private equity funds are looking for high-quality listed companies for controlling acquisitions.
Risk points: Market supervision is becoming more and more stringent. For example, the EU vetoed Apple's acquisition of Shazam in 2022.
Conclusion: Maximizing shareholder interests, the ultimate goal of control acquisitions?
In the capital market, there is no unprovoked stock price increase or unprovoked stock price plunge. Control acquisitions are essentially a "Game of Thrones", and their ultimate goal is to increase corporate value and maximize shareholder interests.
But the reality is that not all mergers and acquisitions can bring growth, and failures are common. So, how do you judge whether a control acquisition is worth looking forward to? Have you ever encountered a situation where the stock price rose or fell sharply after the merger?
Welcome to leave a message for discussion, Goheal looks forward to your wonderful views!
【About Goheal】American Goheal M&A Group is a leading investment holding company focusing on global M&A holdings. It has been deeply involved in the three core business areas of acquisition of listed company control, M&A and restructuring of listed companies, and capital operation of listed companies. With its profound professional strength and rich experience, it provides enterprises with full life cycle services from M&A to restructuring and then to capital operation, aiming to maximize corporate value and achieve long-term benefit growth.
