Pension Plan Funding: M&A’S Poison Pill

Abstract

This study examines the role of pension plan funding status on merger and acquisition (M&A) activity across a large sample of UK corporations. We explore how corporate activity in the M&A market is linked to the funding status of defined benefit pension plans. Pension deficits have a negative impact on the likelihood of firms being acquired, suggesting pension deficits act as a poison pill.

Keywords: M&A, Pension Plan Funding, Count Data Model