References (26)



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

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: https://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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References:  26