In October 2018, IBM announced to acquire software maker Red Hat Inc. in a $33.4 billion deal. The share price of Red Hat increased more than 45%, while IBM share price decreased by more than 5% on the announcement date. For most M&A cases, the acquiring firm shareholders seem to benefit little or even lose from takeovers.

Why is this finding a puzzle? Explain any three reasons offered for it. (6 marks)