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Large Wealth Creation in Mergers and AcquisitionsEliezer M. FichDrexel University - Department of Finance Tu NguyenDrexel University, Finance Department Micah S. OfficerLoyola Marymount University - Department of Finance and Computer Information Systems March 12, 2012 AFA 2013 San Diego Meetings Paper Abstract: We examine completed M&A deals with large bidder shareholder dollar wealth gains at announcement. Our results show that large-gain acquisitions are (i) typically “bolt-on” deals that are small relative to the acquirer’s size; (ii) transaction-specific events (not firm- or CEO-specific events); (iii) enhanced by synergies from a strategic fit in the supply chain; (iv) executed by bidders with high valuation multiples and; (v) implemented when borrowing costs are low. Many of these findings, which differ from those in the existing literature, provide important insight into the factors associated with considerable wealth creation for acquirer shareholders in M&A deals.
Number of Pages in PDF File: 49 Keywords: Mergers and acquisitions, wealth creation JEL Classification: G34, L25, E51 working papers seriesDate posted: March 13, 2012Suggested CitationContact Information
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