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In economics and finance, arbitrage is the practice of taking advantage of a difference in prices in two or more markets – striking a combination of matching deals to capitalise on the difference, the profit being the difference between the market prices at which the unit is traded. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit after transaction costs. For example, an arbitrage opportunity is present when there is the possibility to instantaneously buy something for a low price and sell it for a higher price.
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position.
A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets as commodities.
A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business. The current year profit as well as the retained earnings of previous years are available for distribution; a corporation is usually prohibited from paying a dividend out of its capital. Distribution to shareholders may be in cash or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or by share repurchase. In some cases, the distribution may be of assets.
A shareholder rights plan, colloquially known as a "poison pill", is a type of defensive tactic used by a corporation's board of directors against a takeover.
In business, a takeover is the purchase of one company by another. In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. The use of debt, which normally has a lower cost of capital than equity, serves to reduce the overall cost of financing the acquisition. This is done at the risk of magnified cash flow losses should the acquisition perform poorly after the buyout.
In the field of finance, private equity (PE) is capital stock in a private company that does not offer stock to the general public. Private equity is offered instead to specialized investment funds and limited partnerships that take an active role in the management and structuring of the companies. In casual usage, "private equity" can refer to these investment firms rather than the companies that they invest in.
Eircom Limited, trading as Eir, is a large fixed, mobile and broadband telecommunications company in Ireland. The now privatised company, which is currently incorporated in Jersey, traces its origins to the Ireland's former state-owned monopoly telecommunication provider Telecom Éireann and its predecessors, P&T and before the foundation of the state, the telecommunications division of the GPO. It remains the largest telecommunications operator in Ireland and has overseas operations focused on the business and corporate telecom markets in the United Kingdom. The company was in majority state ownership until 1999, when it was privatised through a floatation on the Irish and New York Stock Exchanges.
A treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market.
Greenmail or greenmailing is the action of purchasing enough shares in a firm to challenge a firm's leadership with the threat of a hostile takeover to force the target company to buy the purchased shares back at a premium in order to prevent the potential takeover.
Risk arbitrage, also known as merger arbitrage, is an investment strategy that speculates on the successful completion of mergers and acquisitions. An investor that employs this strategy is known as an arbitrageur. Risk arbitrage is a type of event-driven investing in that it attempts to exploit pricing inefficiencies caused by a corporate event.
Employee stock ownership, or employee share ownership, is where a company's employees own shares in that company. US employees typically acquire shares through a share option plan. In the UK, Employee Share Purchase Plans are common, wherein deductions are made from an employee's salary to purchase shares over time. In Australia it is common to have all employee plans that provide employees with $1,000 worth of shares on a tax free basis. Such plans may be selective or all-employee plans. Selective plans are typically only made available to senior executives. All-employee plans offer participation to all employees.
Greenshoe, or over-allotment clause, is the term commonly used to describe a special arrangement in a U.S. registered share offering, for example an initial public offering (IPO), which enables the investment bank representing the underwriters to support the share price after the offering without putting their own capital at risk. This clause is codified as a provision in the underwriting agreement between the leading underwriter, the lead manager, and the issuer or vendor. The provision allows the underwriter to purchase up to 15% in additional company shares at the offering share price.
Zoran Corporation was a multinational digital technology company, founded in 1981 and headquartered in Silicon Valley, that was predominantly focused on designing and selling SoC integrated circuits for consumer electronics applications. The name Zoran is derived from the Hebrew word for silicon. Zoran was incorporated in the state of Delaware and had offices in Canada, China, England, Germany, India, Israel, Japan, Korea, Taiwan, and the US. Zoran had strong ties with Israel, with a strong R&D presence and being the beneficiary of incentives from organizations such as Israel's Ministry of Industry and Trade.
Share repurchase, also known as share buyback or stock buyback, is the reacquisition by a company of its own shares. It represents an alternate and more flexible way of returning money to shareholders. When used in coordination with increased corporate leverage, buybacks can increase share prices.
MIND CTI Ltd. is a global provider of billing and customer care solutions and messaging services for voice, data, video and content services. Headquartered in Yokneam, Israel; the company also has offices in the United States of America, Iaşi in Romania and in Germany.
London Stock Exchange Group plc is a United Kingdom-based stock exchange and financial information company headquartered in the City of London, England. It owns the London Stock Exchange, Refinitiv, LSEG Technology, FTSE Russell, and majority stakes in LCH and Tradeweb.
Cromwell Property Group is a commercial real estate investment and management company with operations in Australia, New Zealand and Europe. The Group is in the ASX 200 list. At December 2020, Cromwell had a market capitalisation of $A2.3 billion, a direct property investment portfolio in Australia valued at $A3 billion and total assets under management of $A11.6 billion across Australia, New Zealand and Europe.
References
- ↑ Mikkelson, Wayne H.; Ruback, Richard S. (1991). "Targeted Repurchases and Common Stock Returns". The RAND Journal of Economics . 22 (4): 544–561. doi:10.2307/2600988. hdl: 1721.1/49233 . JSTOR 2600988.