Market Reaction on Acquisition and the Reason for All-Cash Transaction

M&A
Student's Name
Institutional Affiliation
Instructor
Date
In 2013, Heinz confirmed the news of an acquisition by Warren Buffet's Berkshire. The news saw the stock's share price skyrocket beyond the offering price. The market reaction resulted from the perception that the acquisition would enable Heinz to grow. Economic experts argued that the new venture provided an avenue for the firm to focus on providing the market with more quality products. Equity analysts' commentaries revealed how the deal's lucrative nature places Heinz at the top of the food industry (Von Beschwitz, 2018). According to Warren Buffet, at the time, Heinz was a firm with sustainable growth and high-quality standards essential for continuous innovation. The acquisition was positive news to the market because it showcased how global success in business operations attracts robust investment. Berkshire's willingness to avoid management, operation, and previous contract interference sparked a positive market reaction. For example, upon the announcement, the new owners allowed the company to continue operating from the previous headquarters (Stowell & Kawar, 2017). the move to acquire Heinz at a lucrative share price received a positive market response as the deal allowed the organization to expand internationally.
Question 2
There are numerous reasons why Berkshire preferred an all-cash transaction. One, this approach is efficient and faster when closing deals. Essentially, the approach has fewer risks of financial barriers. In Heinz's case, an all-cash transaction was advantageous as it played a fundamental role in soaring the stock price. On that note, one of the key benefits of the strategy is certainty in the ...