Current Issues in Finance Essay Example | Topics and Well Written Essays - 3500 words

Current Issues in Finance - Essay ExampleAs the paper highlights not to miss mentioning is the news of UK Prudential closing $35.5B take everywhere bid of AIG Asian receivable to pressure from the shareholders to lower the bid asking rate by $30B. Market was not in estimate of clinching the deal, as after cancelling the deal, Prudentials shares rose by 6.3% on Tuesday. At the same time, the final stage of the takeover bid was a blow to the AIG efforts to pay back the loan of $132 billion to the Treasury from the harvest-home of the sale to Prudential, which was taken to save the AIG from collapsing from the financial crisis in 2008.This discussion outlines that there could be a repress of reasons attributed to a fusion or acquisition wherein payment is made through stock. Companies are acquired with the aim of safer income streams, as cost of debt could be very high and banks wont be forthcoming with the offer of decreased rate of interests. Mergers where price/earning ratio ( P/E) is very high are not welcomed because of the fear of loss of income over share price. If a companys stocks are an all-time high, in stead of paying bullion it offers its new stock shares. But sometimes it becomes all the more difficult for the buyer company to measure the target company as the stock price of the target company rises due to the possibility of merger bid. Answers to the above questions can be reached at by analysing the cases of acquisitions and mergers in the literature in the recent one-time(prenominal) on the financial and valuation aspects of such acquisitions and mergers. There could be number of motives behind an acquisition. Diversification in a different line of business has been an aim to be achieved through acquisition.