Berkshire acquire Geico, after the announcement of achievement, Berkshire's stock price rose, why is it so?

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Answers:   The per share price of a company will increase after an acquisition announcement if the investing public believes that plus will be created (in excess of current prices) due to the acquisition.

For instance, if Berkshire be worth $1.5 billion (hypothetical numbers) and it bought Geico for $0.4 billion, any one who estimates the combined company will be worth MORE then $1.9 billion will purchase shares of Berkshire because they are perceived to be worth more than the current price indicates.

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