Corporate Law Blog

Merger talks between companies lead to share price increases

Dish and Direc TV have been in the middle of negotiations to merge.  The two companies had previously attempted to form a merger, but the Federal Communications Commission had nixed the deal out of concerns that competition would be eliminated.

Renewed efforts may have come about due to the proposed $45 billion acquisition of Time Warner Cable Inc. by Comcast Corp.  The video industry has said to have become much more competitive during the past decade due to the existence of telecommunications companies.  We are likely to see even more changes to the industry during the next five years.  

Rumors of this merger talk seem to have provoked favorable activity on the market. Direc TV shares have risen by 5.7 percent and the price of Dish shares has risen 6.3 percent. This demonstrates that if handled correctly mergers can have an extremely positive financial impact for both companies.

However, attempts to merge or acquire other corporations can be highly regulated. That agencies like the FCC have the ability to quash an attempted merger bears out why the approach taken needs to be conducted with care. The legal and regulatory issues are often in flux and businesses may badly be in need of attorneys who understand changes that are taken place.

Attorneys are often required through-out the entire process of a merger or acquisition. This is especially true since certain corporate transactions can involve billions of dollars changing hands. And even on a smaller scale, businesses do not want to enter a merger only to see the new venture fail.

Source: Kentucky.com, "Dish, Direc TV shares rise on reported merger talk," March 26, 2014