Wolf in cashmere LVMH case 1. 

The (initial) October 15 offer was for $120 in cash. However, when both firms confirmed publicly their merger talks, Tiffany's stock price rose above the $120 offer. How is this possible? Is the market reaction irrational?

 

2. Using the 3-day price changes associated with the Oct 28 and Nov 24 events in Exhibit 15b, determine the synergy value (in dollars) implied by the market reactions. In your judgement, is this a reasonable estimate for the expected combined gains? Why? 

Answer rating: 100% (QA)

1 Market Reaction and Stock Price Increase The stock price of Tiffany rising above the 120 offer price after the merger talks were publicly confirmed is not necessarily irrational In fact it is a comm... View the full answer