Examine the stock returns for both Pfizer and AstraZeneca during the Essay - 1

Examine the stock returns for both Pfizer and AstraZeneca during the bid process and provide possible reasons for changes in price on key dates - Essay Example t a company then price of the company’s stock is likely to rise while price is likely to fall is an expected acquisition is likely to be detrimental. Factors such as â€Å"investment strategies,† â€Å"ownership forms,† â€Å"capital structures,† and â€Å"dividend policies† that are likely to change with an acquisition are also likely to influence stock prices (Moyer, McGuigan, & Kretlow 2008, p. 12). In addition, expressed opinions by investors can either improve or reduce share price at a time (Khan & Zuberi 1999, p. 45) and all these could have influenced prices and return of the two companies’ stock. One of the key dates in the takeover period is November 25, 2013 when Pfizer informed AstraZeneca of intended takeover. Even though it was a private correspondence, it could have spread to stakeholders and a perceived lost value among Pfizer’s stakeholders could have triggered the observed negative change in stock price. Price for AstraZeneca however increased afterwards to indicate perceived benefits by the company’s stockholders. These suggest that Pfizer offered better economic prospects than AstraZeneca did at the time, and its internal environment could be more promising than that of AstraZeneca. On May 1, 2014, Pfizer made public its takeover interest and suffered a subsequent decline in price, which begun two days earlier, and perceived loss of advantage by existing stockholders as well as possible negative investor opinions could have caused the decline. At the same time, stock price for AstraZeneca declines and this could be a response to Pfizer’s price trends that made it less attractive. The fall in stock price for Pfizer continued until 7 May, a time at which the British Prime Minister expressed concerns over the takeover, and then stabilized until mid May. Price for AstraZeneca stock however remained constant over this period. Pfizer’s persistence on the takeover, against its shareholder’s confidence could explain the fall and the