Share price after merger?

[ausbronc]

just wondering if a 50/50 merger between 2 comnpanies is generally a long term share investment or do you expect a sharp rise in share price?

-In this case im lookin at the Hutchinson 3 mobile and vodaphone merger.

 

[jono1887]

Re: Mergers

just wondering if a 50/50 merger between 2 comnpanies is generally a long term share investment or do you expect a sharp rise in share price?

-In this case im lookin at the Hutchinson 3 mobile and vodaphone merger.

Theres already been a sharp rise in the price of the weaker party of the merger (3) of like 30%+ i think. Im guessing the news of the merger has already in incorporated itself into the price by now.

 

[ausbronc]

Re: Mergers

cheers Jono

 

[doctorj]

Re: Mergers

Mergers are horrible things - it can take years to begin to realise the benefits of most. All but the smallest companies have a number of issues to deal with in a merger: large amounts of duplication of resources, incompatible systems, different cultures, lack of management understanding of 'the other half', incompatible supply chains/pricing/distribution....

The list goes on. It's a nightmare.

 

[ausbronc]

Re: Mergers

Mergers are horrible things

lol

1. With the 50/50 merger between vodafone and 3mobile, if i bought shares in 3mobile and vodafone goes under, what would be the general effects on the share price of 3mobile?

2. What would be the outcome if 3mobile went under, would vodafone step in and 3mobile shares not lose too much value?

im a beginner so any advice would be great

 

[jono1887]

Re: Mergers

lol

1. With the 50/50 merger between vodafone and 3mobile, if i bought shares in 3mobile and vodafone goes under, what would be the general effects on the share price of 3mobile?

2. What would be the outcome if 3mobile went under, would vodafone step in and 3mobile shares not lose too much value?

im a beginner so any advice would be great

I don't picture either company going down... Vodafone is an international company that sells telecommunications to sooo many countries. 3 on the other hand has been loosing money for years and its hong kong based owners want to dump it.

3 are losing money, but i dont think vodafone will pull out of the merger as it will benefit significantly from 3's current customer base and 3G infrastructure network which covers most of Australia. However, that said I would say if the merger fell apart - 3's shares would plummet perhaps 50% or more and vodafones shares could possibly rise slightly.

If you wanted to trade these 2 stocks, they may be a good pair of stocks to hedge against each other... hmmm... i think i may look into this myself

 

[ausbronc]

so which way would you hedge???

does that mean buying vodafone shares and short selling 3mobile?

 

[jono1887]

so which way would you hedge???

does that mean buying vodafone shares and short selling 3mobile?

yeh, i guess so... go long on voda and short on 3. But I'd expect 3 to rise more once more details of the merger comes out...

 

[johenmo]

Re: Mergers

Mergers are horrible things - it can take years to begin to realise the benefits of most. All but the smallest companies have a number of issues to deal with in a merger: large amounts of duplication of resources, incompatible systems, different cultures, lack of management understanding of 'the other half', incompatible supply chains/pricing/distribution....

The list goes on. It's a nightmare.

When I went to business school 5 or 6 years ago we looked at this, and as a general rule the full expected benefits didn't eventuate. Some work better than others. I had Oxiana and then it merged with Zinifex and ...........