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Investopedia explains 'Acquisition Premium'
Once a company decides it wants to acquire another, it will first attempt to put a real value on the company to be purchased. Then, once it decides how much the company is worth, the acquiring company will decide how much it's willing to pay on top of that in order to present an attractive deal, especially if there are other firms considering acquisition. If this premium offer is accepted, but the value of the company drops before the acquisition is final, possibly because its stock price falls and its product becomes obsolete or concerns are raised about the future of the industry, then the acquiring company may withdraw its offer.
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