notices - See details
Notices
JH
Jim Hamilton (not verified)
19th March 2022 | 9:43am

Whether you buy the whole company or just one share, it is the price that you pay that matters. When a company pays too much for an acquisition, it can be devastating. Look at Teva as an example, paying $40 billion, largely borrowed, for a business worth less than $20 billion. Another example is Empire's purchase of Safeway in Canada at around eight times operating income. It resulted in major one time loss. However Cerberus bought Safeway in the US at around four times operating income and was a very profitable acquisition.
To make a sweeping observation that acquisitions are bad is just incorrect.