The buyout premium must be sufficient to win over the selling shareholders. For example: If shares of XYZ are currently trading at $28, a buyer may offer $36 for them.
Stock Price Gap Up
The moment the buyout is announced, the stock price jumps and stays close to the buyout offer. Buyouts are usually announced outside regular trading hours so as not to disrupt regular trading. A company that closed at $28 the day before a buyout announcement of $36 per share would open at around $36 the day after the buyout announcement.
Since a buyout creates an instant profit for the existing shareholders, investors are always on the lookout for buyout candidates. Buyers therefore try to keep their plans secret until the announcement is made, but sometimes the information leaks out and a stock may suddenly begin to drift upward on no news but persistent rumors.
Stock Trading After Announcement
A buyout may take months to complete because it must be approved by the shareholders or may require government approval, because other buyers come up with a better offer and start a bidding war or because the board of directors of the company being bought