Gains from Mergers and Acquisitions Around the World: New Evidence
ICMA Centre, Henley Business School
University of Surrey - Surrey Business School
Nickolaos G. Travlos
ALBA Graduate Business School
June 20, 2009
Financial Management Journal, Forthcoming
Using a global M&A data set, this paper provides evidence that the empirical observations relating public acquisitions to, at best, zero abnormal returns, and their stock-financed subset to negative abnormal returns for acquiring firms around the deal announcement are not unanimous across countries. Acquirers beyond the most competitive takeover markets (the U.S., U.K., and Canada) pay lower premia and realize gains, on average, while share-for-share offers are at least non-value destroying for their shareholders. In contrast, target shareholders within these markets gain significantly less, implying that the benefits generated are more evenly split between the involved parties. The degree of competition in the market for corporate control is a robust determinant of shareholder gains and takeover premia after controlling for deal, firm characteristics, and other differences across countries.
Number of Pages in PDF File: 41
Keywords: Public acquisitions, competition, premium, acquisition gains, method of payment
JEL Classification: G11, G14, G34Accepted Paper Series
Date posted: June 20, 2009 ; Last revised: June 27, 2010
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