Blank Check Acquisitions
Anh L. Tran
Cass Business School, City University London
November 16, 2010
Special Purpose Acquisition Companies (SPACs), a particular type of blank check firms, have risen dramatically since 2003 and account for one third of the U.S. IPO market in 2008. Compared to other public acquirers, SPACs tend to make focused acquisitions, target mostly private companies, are less likely to do cash only deals or tender offers, and less likely to complete acquisitions. SPACs exhibit a mean cumulative abnormal return of 1.7% upon deal announcement and a monthly excess return of 1.5% from deal announcement until closing. I show that SPACs make better acquisitions: they negotiate an additional 7.6% discount compared to other public acquirers that bid for private targets. The results highlight the role of specialization, ownership structure, and independent long-term institutional blockholders’ monitoring as important corporate governance mechanisms in SPACs.
Number of Pages in PDF File: 54
Keywords: Blank check, Acquisitions, Bidder returns
JEL Classification: G34working papers series
Date posted: May 29, 2012 ; Last revised: June 7, 2012
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo4 in 0.516 seconds