Bidder-Specific Synergies and the Evolution of Acquirer Returns

73 Pages Posted: 19 Aug 2019 Last revised: 16 Dec 2020

See all articles by Olivier Dessaint

Olivier Dessaint

INSEAD

B. Espen Eckbo

Tuck School of Business at Dartmouth; European Corporate Governance Institute (ECGI)

Andrey Golubov

University of Toronto - Rotman School of Management

Date Written: December 15, 2020

Abstract

Largely constant average acquirer returns over the past four decades mask fundamental changes in the takeover market. Controlling for bidder composition, the common component of acquirer returns has increased by five percentage points relative to the 1980s. Offsetting this increase, the average bidder-specific component has declined. We propose a theory of bidder-specific synergies to help interpret these opposing trends. In our theory and in the data, acquirer returns increase with the extent to which synergies are unique to that bidder. The composition effect reflects bidder uniqueness. Overall, the evidence is consistent with rising merger synergies that have become less bidder-specific.

Keywords: Mergers and acquisitions, acquirer returns, bidder-specific synergies, bidder uniqueness

JEL Classification: G14, G34

Suggested Citation

Dessaint, Olivier and Eckbo, B. Espen and Golubov, Andrey, Bidder-Specific Synergies and the Evolution of Acquirer Returns (December 15, 2020). Tuck School of Business Working Paper No. 3437865, Available at SSRN: https://ssrn.com/abstract=3437865 or http://dx.doi.org/10.2139/ssrn.3437865

Olivier Dessaint

INSEAD

Boulevard de Constance
77305 Fontainebleau Cedex
France

B. Espen Eckbo

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755
United States
603-646-3953 (Phone)
603-646-3805 (Fax)

HOME PAGE: http://www.tuck.dartmouth.edu/eckbo

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Andrey Golubov (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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