Share Prices - Trends when companies merge?

[walm]

Behemoth said:

Jon39 said:

I was unexpectedly surprised last year, with a rare exception to this.

Royal Dutch Shell bought BG.
The BG shareholders who still hold the Shell shares they received, have had a remarkable capital increase, and also a more than trebling of their income.

Maybe, but one year is neither enough time to implement nor to see the result of structural change. It may be just a honeymoon period after the traditional pre-acquisition tart-up. Come back in a 5-10 year timeframe when all the cost has sunk in, margin increase unmaterialised and stage make-up truly worn off...

Also, it isn't an exception.
The seller (BG) went up, as Yipper said.

And particularly for O&G just LOOK AT THE OIL PRICE!!!

[walm]

Cheib said:

It's absolutely impossible to generalise....each and every merger is different. I remember years ago when JP Morgan and Chase Manhattan merged....within a couple of years the price of the combined entity was valued at the same as Chase was on its own. Massive destruction of shareholder value.

Nothing to do with the financial crisis?
All to do with the merger?

[Cheib]

walm said:

Cheib said:

It's absolutely impossible to generalise....each and every merger is different. I remember years ago when JP Morgan and Chase Manhattan merged....within a couple of years the price of the combined entity was valued at the same as Chase was on its own. Massive destruction of shareholder value.

Nothing to do with the financial crisis?
All to do with the merger?

JPM/Chase merger was 2000.....the value destruction of the merger happened well before 2007/8. Although one of the reasons that JPM (the investment banking arm of the new entity) esacped many of the travails that the other investment banks did in 2008 was because of what had happened during the merger.

[Jon39]

Behemoth said:

It may be just a honeymoon period after the traditional pre-acquisition tart-up.

Hardly. Apart from the dividend income aspect, the capital value increase was entirely the oil price rise, from about $30 at the time of takeover completion.

Anyway, the size of BG was small(ish) compared with Royal Dutch Shell.

Edited by Jon39 on Thursday 19th January 15:48

[Jon39]

walm said:

Also, it isn't an exception.
The seller (BG) went up, as Yipper said.

You have lost me there.
BG was obviously no longer quoted, after the takeover was completed.

[NRS]

Jon39 said:

Behemoth said:

It may be just a honeymoon period after the traditional pre-acquisition tart-up.

Hardly. Apart from the dividend income aspect, the capital value increase was entirely the oil price rise, from about $30 at the time of takeover completion.

Anyway, the size of BG was small(ish) compared with Royal Dutch Shell.

In addition to the oil price I presume some of the issues for BG were addressed by being part of Shell. BG had done a lot of good discoveries, but promised to do too much in terms of their development/ timing. Presumably by being part of Shell they had more cashflow to be able to take the good projects forward quickly, rather than having to delay good projects due to cash flow constraints. (The above is said from what I understand BG had issues with, I haven't looked at either company in detail).

[walm]

Jon39 said:

walm said:

Also, it isn't an exception.
The seller (BG) went up, as Yipper said.

You have lost me there.
BG was obviously no longer quoted, after the takeover was completed.

Yipper's full quote was that buyers go down, sellers go up and post-merger the merger fails.
I was merely suggesting it wasn't 100% an exception to Yipper's full comment - just half of it! (Which was the bit you quoted, in fairness...)

[Behemoth]

walm said:

Also, it isn't an exception.
The seller (BG) went up, as Yipper said.

And particularly for O&G just LOOK AT THE OIL PRICE!!!

So,

Nothing to do with the merger?
All to do with the oil price?