Word: stockings
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Dates: during 1980-1989
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...mammoth gains that megamergers create have aroused suspicions that some players may be getting advance word of pending deals and profiting from inside information. For example, ABC stock jumped from $66 a share to $105 earlier this year in the month before the announcement of its acquisition by Capital Cities. General Foods rose from $70 a share to $120 before it was bought by Philip Morris. Last Wednesday the price of RCA stock jumped $10.375, to $63.50, hours before the merger was announced...
...billion in November. Though Bergerac's pain at seeing his company bought was eased by a $36 million parting settlement, or golden parachute, he still talks like a bitter man. "The whole thing was crazy," he says. "Here we built a great American corporation. Then through this process the stock ended up in the hands of arbitragers, who forced the sale of the company. And junk-bond financing made it all possible...
Institutional investors are also big gainers. Some 80% of trading on the stock market is done by institutions. Their major concern is to get the highest possible return on investments, and a quick corporate takeover is often the way. Institutions are often eager to sell out to arbitragers for large profits once a merger fight begins. To such investors, notes one veteran Wall Street watcher, "a corporation is no longer a company, it's just a deal...
...Lynch, enforcement director of the Securities and Exchange Commission, worries about what he calls "an unsettling proliferation of rumor activity in the marketplace." Says Lynch: "We have opened an unusually large number of investigations recently." Last week the SEC and two exchanges were studying the sudden jump in RCA stock before the merger announcement...
...threat of takeover has also forced managements to take steps to boost their stock prices, which benefits all their investors. Says Robert Greenhill, a managing director for the investment banker Morgan Stanley: "Corporate America has realized it had to get much more in tune with its shareholders...