For the acquired company you have traded in illiquid stock you have a lot of control over for illiquid stock you don't have control of. Only worth doing if you really, really believe in the acquiring company or can cash out a significant percentage of the stock.
A supplementary article that the returns of acquisitions through portfolio companies (known as bolt on acquisitions) can create better value than investments in new firms (from the perspective of an investor) - <a href="http://seekingalpha.com/article/175698-the-economics-of-bolt-on-acquisitions" rel="nofollow">http://seekingalpha.com/article/175698-the-economics-of-bolt...</a>
Friendfeed's acquisition by Facebook was widely viewed as a talent grab. It seems to be working out well enough for FB so far.<p><a href="http://blog.louisgray.com/2009/08/friendfeeds-not-dead-while-not-clear.html" rel="nofollow">http://blog.louisgray.com/2009/08/friendfeeds-not-dead-while...</a>
A <i>major</i> example of this was Apple's purchase of PA Semi:<p><a href="http://www.appleinsider.com/articles/08/04/23/apples_pa_semi_buyout_motivated_by_assets_not_products.html" rel="nofollow">http://www.appleinsider.com/articles/08/04/23/apples_pa_semi...</a>