[quote=DataAgent]When Company A buys Company B, people costs are reduced ie. no need for two accounting depts. This cost reduction usually results in increased profit. And increased profit will usually increase share price.[/quote]
DataAgent, I totally agree that this is the widely held view that explains the stock rise. However, the irony here is that there are many many cases where merging companies and slashing jobs ended up destroying value rather than increasing efficiency and increasing profits. More evidence that stock prices are NOT based on company fundamentals but based on beliefs of traders.
