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I've read this: Why do stocks gap up after a buyout is announced? I'm wondering if it's possible for the opposite to occur: could the stock price of a target firm fall when a buyout is announced? What are the conditions under which a fall in price could happen when a company is going to be acquired by another company?

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The price of a target company to be acquired usually goes up because a premium must be offered to incentivize shareholders to sell. Infrequently, the opposite happens. I say infrequently because I have maintained a database for 25+ years via a Thomson Reuters subscription and I rarely see it. I'd guess that if you do a Google search, you'll find some stories out there.

One possibility for a drop in price is that based on rumors, share price has run up past the acquisition price and the buy out offer is lower.

Another is that it's a stock deal and if the merger is viewed poorly, a drop in the acquirer's price values the acquisition price lower.

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  • Just curious: is this "Thomson Reuters subscription" an Eikon or some sort of data feed (API)? Isn't such data prohibitively expensive for most of retail?
    – Flux
    Oct 7, 2020 at 14:11
  • The cost depends on the nature of the data (equities, mutual funds, options, EOD, real time, etc.). I only subscribe to EOD for equities (stocks and ETFs) and not that I need it, it provides something like 25+ years of historical data, assuming that the security traded back then. It's not expensive. Oct 7, 2020 at 14:40
  • That's interesting. So you called them, told them the kind data you need, and they suggested a subscription product that fit your requirements? Is your subscription display-only, or are you allowed to extract and save data?
    – Flux
    Oct 7, 2020 at 14:51
  • My answer isn't relevant to current technology. I'm a relic from a bygone era. Circa 1990, I went through a technical analysis phase. I bought a DOS charting program called Metastock (and later a Windows version) which stores the data in individual files. I can view any equity for any period of time and can export that data as well. As an example, I have invested and traded preferred stocks for 20+ years. I've written a routine that exports EOD data for about 400 of them and in under 3 minutes it updates 75+ different spreadsheets. I don't know what T-R currently offers. I just auto renew Oct 7, 2020 at 15:08
  • What made you quit technical analysis? (I know that we're going off-topic, but I couldn't resist. You're very knowledgeable, and your experiences are interesting)
    – Flux
    Oct 7, 2020 at 15:42

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