A large amount of trading following a hostile tender offer is a good sign for the acquirer because:
A)The shares are moving from regular investors into the hands of specialists.
B)A competing offer is likely.
C)The acquirer will pay a lower premium for the shares.
D)A large amount of trading is a bad sign for the acquirer.

Question

Quizplus · Accepted Answer

A large amount of trading following a hostile tender offer indicates that regular investors are selling their shares to specialists, who are likely to be arbitrageurs or hedge funds. This suggests that the acquirer will have a higher chance of successfully completing the offer, as the shares are moving into the hands of investors who are more interested in making a profit from the takeover than in holding onto the shares for the long-term.

A Large Amount of Trading Following a Hostile Tender Offer