Wealth Transfers Among and Between Bond Issues in Mergers and Acquisitions: Evidence from Bond Tender Offers
Matthew T. Billett
Indiana University - Kelley School of Business
AFA 2012 Chicago Meetings Paper
We explore bondholder wealth effects of mergers and acquisitions (M&A) at the bond issue level where a tender offer is made for one or more of the target or acquiring firms’ bond issues. We document 28 instances in the 1985-1995 period and 223 from 1996-2008. This rise in M&A related bond tender offer activity coincides with the increased use of change in control covenants and the timing of significant bondholder wealth effects documented in prior studies. We find tender offers influence not only the associated bond’s wealth, but also the wealth of shareholders and sibling bond issues that remain outstanding.
Number of Pages in PDF File: 39
Keywords: Mergers, acquisitions, tender offer, wealth transfers
JEL Classification: G34, G32working papers series
Date posted: March 15, 2011 ; Last revised: May 18, 2011
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