Mega Deals are Signs of Weakness
Submitted by Ethanol Blog
Although mega deals are usually good for stock market sector pricing, they aren’t typically positive for sector economics unless you have a dumb seller and dumb buyer. As one of my associates at Lehman Brothers once said, “The Acquirer wants the Acquiree at a low price and the acquiree usually trades at a low price because of sector economics.” Now enter the institutional investor who loves to bet on sector consolidation in which we are now seeing in the ethanol sector. Expect a move upward for ethanol stocks.
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