Want a Quick 3% Pop In Your Stock? Make an Acqusition

In evaluating U.S. public-to-public takeovers since the beginning of July 2013, the stock of the acquiring companies have gained an average of 2.9% the day of, or the first trading day after, making a takeover announcement. The trend is counter-intuitive to conventional market thinking that the stock of the acquiring company will be lower following a deal. The trend could also go a long way in pushing corporate management teams on the fence about a potential takeover to pull the trigger.

Below is the initial market reaction of the stocks of the acquiring companies.

Akorn, Inc. (NASDAQ: AKRX) +12%. On August 27, announced a deal to acquire Hi-Tech Pharmacal (NASDAQ: HITK) for $640 million.

Amgen (NASDAQ: AMGN) +7.7%. On August 25, announced a deal to acquire Onyx Pharmaceuticals (NASDAQ: ONXX) for $10.4 billion.

Maxim Integrated (NASDAQ: MXIM) -3.4%. On August 15, announced a deal to acquire Volterra (NASDAQ: VLTR) for $605 million.

Perrigo (NYSE: PRGO) -6.7%. On July 29, announced a deal to acquire Elan (NYSE: ELN) for $8.6 billion.

Cisco (NASDAQ: CSCO) -0.6%. On July 23, announced a deal to acquire Sourcefire (Nasdaq: FIRE) for $2.7 billion.

Spartan Stores (NASDAQ: SPTN) +4%. On July 22, announced a deal to acquire Nash Finch Company (Nasdaq: NAFC) for $1.3 billion.

PacWest Bancorp (Nasdaq: PACW) +7%. On July 22, announced a deal to merge with CapitalSource Inc. (NYSE: CSE) in a transaction valued at approximately $2.3 billion.

Bally Technologies (NYSE: BYI) +6.9%. On July 16, announced a deal to acquire SHFL entertainment, Inc. (NASDAQ: SHFL) for approximately $1.3 billion.

AT&T (NYSE: T) -0.7%. On July 12, announced a deal to acquire Leap Wireless International Inc. (NASDAQ: LEAP).

Kroger (NYSE: KR) +2.7%. On July 9, announced a deal to acquire Harris Teeter Supermarkets, Inc. (NYSE: HTSI) for $2.5 billion.

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