20.4. Diversified Industries has made a bid to purchase Cigmatics Inc., offering to exchange two Diversified shares

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20.4. Diversified Industries has made a bid to purchase Cigmatics Inc., offering to exchange two Diversified shares for 1 share of Cigmatics. When this bid is announced, Diversified Industries’ shares drop 5 percent. Henry Clavett, the CEO, has asked you to interpret what this decline in stock prices means. Does it imply that Cigmatics is a bad acquisition?

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Financial Markets And Corporate Strategy

ISBN: 9780071157612

2nd Edition

Authors: Mark Grinblatt, Sheridan Titman

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