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Acquisition Premium |
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Acquisition Premium The difference between the actual cost for acquiring a target firm versus the estimate made of its value before the acquisition. Notes: During a merger and acquisition, companies will first estimate the cost that they wish to pay for a target firm. As the entire M&A process takes many weeks, the price paid for the target firm may in fact be higher or lower than its market price at the time of completion because of economic fluctuations.How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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? Mentioned in | ? References in periodicals archive | ||
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Unlike a holder who acquires a security at a premium, a holder who pays
an acquisition premium must accrue any OID that arose when the
instrument was originally issued. They could easily see how the deal would
produce improvements in operating profit, more efficient use of capital
and reductions in tax rates -- more than justifying the modest 20
percent acquisition premium of about $2. In Pfizer's recent acquisition of Warner Lambert, the pooling
of the companies involved an acquisition premium approximately 34% above
Warner Lambert's stock price just before Pfizer announced its first
bid. |
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