Abstract

http://ssrn.com/abstract=1785715
 
 

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Bond Tender Offers in Mergers and Acquisitions


Matthew T. Billett


Indiana University - Kelley School of Business - Department of Finance

Ke Yang


Lehigh University

July 28, 2016

Journal of Corporate Finance, Forthcoming

Abstract:     
We explore the motives and consequences of bond tender offers announced in connection with mergers and acquisitions (M&A). We find merging firms use bond tender offers strategically to renegotiate with bondholders to gain financial flexibility by reducing leverage and eliminating covenants, and to curtail the coinsurance benefits associated with M&A. Moreover, we find bondholder wealth effects depend not only on the bond’s own characteristics, but also on the characteristics of its sibling bonds. Finally, the use of bond tender offers in M&A is associated with increased likelihood of deal consummation and lower acquisition premiums.

Number of Pages in PDF File: 34

Keywords: Mergers; Acquisitions; Bond tender offers; Coinsurance; Covenants

JEL Classification: G34, G32


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Date posted: March 15, 2011 ; Last revised: August 3, 2016

Suggested Citation

Billett, Matthew T. and Yang, Ke, Bond Tender Offers in Mergers and Acquisitions (July 28, 2016). Journal of Corporate Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1785715 or http://dx.doi.org/10.2139/ssrn.1785715

Contact Information

Matthew T. Billett (Contact Author)
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3366 (Phone)

Ke Yang
Lehigh University ( email )
621 Taylor Street
Bethlehem, PA 18015
United States
6107583684 (Phone)
6107586429 (Fax)
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