Takeover: A takeover can be defined as an activity that takes place when an acquiring firm makes a bid with the intention to consider control of a target company, most often by the purchase of a majority stake. When the takeover goes through, the company that acquires a company becomes liable for all the activities, operations, debt, and holdings of the target company. In case when the target company is a publicly traded company then the acquiring company offers for all the outstanding shares of the company. To determine: The effect on the target share price on the announcement of a takeover, on an average.

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Chapter 22, Problem 3CC

Summary Introduction

Takeover:

A takeover can be defined as an activity that takes place when an acquiring firm makes a bid with the intention to consider control of a target company, most often by the purchase of a majority stake.

When the takeover goes through, the company that acquires a company becomes liable for all the activities, operations, debt, and holdings of the target company. In case when the target company is a publicly traded company then the acquiring company offers for all the outstanding shares of the company.

To determine:

The effect on the target share price on the announcement of a takeover, on an average.

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