What is Mergers & Acquisitions (M&A)?
M&A includes mergers (two companies combining, often as equals), acquisitions (one company buying another), tender offers (going directly to shareholders), and spin-offs (carving out a business). Deals can be friendly (board-approved) or hostile (rejected by target board). Payment is in cash, stock, or a mix. Antitrust regulators (DOJ/FTC in US, EU Commission in Europe, CCI in India) review larger deals.
Why it matters for investors
M&A activity reshapes industries and creates near-term arbitrage opportunities. When Company A announces an acquisition of Company B at a premium, B's stock typically jumps to near the offer price. The spread between B's trading price and the offer price reflects deal completion risk (regulatory, financing, antitrust). M&A volume is a leading indicator of corporate confidence.