Predator and the Prey... which to buy?

[DionM]

If you have suspicions that one company is going to buy out another, is it generally prudent to have shares in the company that is going to be bought out, or the buyer?

I know with recent experience (BHP and RIO), RIOs price went ape.

But what if there is heightened / suspicious activity on the company about to be bought out and the SP has already risen ... does the old "buy on the rumour, sell on the fact" come into play and there is no more increase in price (or indeed, a loss of those recent gains)?

 

[Junior]

Re: Predator and the Prey ... which to buy?

I think it depends on the particular situation. It depends if the predator is perceived to be paying a reasonable price to acquire it's prey.

 

[Rainmaker2000]

Interesting question because it practice it almost never, never pays to hold predator shares in the short term, assuming it is a 'scrip' takeover........your shares are just exchanged for more expensive shares....smart players know this and sell.........different scenario however if the takeover is made with cash or debt

 

[tronic72]

Prey Prey Prey.

I agree with Rainmaker.

The fact that the predator needs to come up with cash in the first place means their bottom line will suffer short term The predators always need at least a year to prove to the Market that the acquisition was a good decision and money well spent.

My 2c

 

[ithatheekret]

The RIO tussle from what I can see , is attracting comments on Wayne Swans leanings towards it , more so now that a Chinese suitor has been swung into the storyline . I see a bigger hurdle by European regulators .

Whatever way the wind blows , I have the stock trading at a discount and expect a stoush on this one .

 

[nizar]

If you have suspicions that one company is going to buy out another, is it generally prudent to have shares in the company that is going to be bought out, or the buyer?

I know with recent experience (BHP and RIO), RIOs price went ape.

But what if there is heightened / suspicious activity on the company about to be bought out and the SP has already risen ... does the old "buy on the rumour, sell on the fact" come into play and there is no more increase in price (or indeed, a loss of those recent gains)?

Prey for sure.