A bid for a company is just a bid, until it's a deal
— -- A: The battle for Wachovia probably surprised just about everyone.
While banking giant Lehman Bros. was left to fail, and Merrill Lynch and Washington Mutual were pushed into marriages with banks that have deep pockets, there's was a bidding war for Wachovia.
Investors are often baffled when they see a stock trade for more than the price offered by a suitor. Generally, that means the offer was low and could be raised, or there's another bidder in the wings prepared to offer more.
That was the case with Wachovia. But be careful, because it's not always the case. A target company's stock can easily fall close to the original buyout price if another buyer doesn't emerge.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.
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