The Price at Which a Merger Target's Stock Is Acquired

The price at which a merger target's stock is acquired virtually always reflects a premium over its pre-merger market value because:

A) the acquirer is trying to fairly divide the gain it will make on the acquisition between its own stockholders and the target's.
B) it takes a substantial premium to get a large number of shareholders to sell at one time.
C) the combined firm generally has an increased value because of additional leverage.
D) the acquirer wants the target's shareholders to be happy about the merger because they will be among its shareholders after the transaction.