Who Benefits from Bond Tender Offers in Europe?

34 Pages Posted: 7 Jul 2006

See all articles by Abe de Jong

Abe de Jong

Monash University; University of Groningen; European Corporate Governance Institute (ECGI)

Peter Roosenboom

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Willem Schramade

Nyenrode Business University

Date Written: June 22, 2006

Abstract

This paper documents the €73 billion in European bond tender offers from 1996 to 2005. European tender offers appear to be much larger than US offers and are seldom motivated by distress relief. Unlike prior research on bond tender offers, we investigate wealth effects to both shareholders and bondholders. We find average bond tender premiums of 3.9% and insignificant stock price reactions, but no evidence of wealth transfers. Moreover, wealth effects to both groups increase in the remaining time to maturity. Thus, tendering the bonds, rather than waiting for them to mature, appears to be a win-win situation.

Keywords: bonds, tender offers, repurchases, financial restructuring, capital structure

JEL Classification: G32, G34

Suggested Citation

de Jong, Abe and Roosenboom, Peter and Schramade, Willem, Who Benefits from Bond Tender Offers in Europe? (June 22, 2006). Available at SSRN: https://ssrn.com/abstract=912502 or http://dx.doi.org/10.2139/ssrn.912502

Abe De Jong

Monash University ( email )

900 Dandenong Rd
Room H3-56
Caulfield East, Victoria 3145
Australia

HOME PAGE: http://https://research.monash.edu/en/persons/abe-de-jong

University of Groningen ( email )

Postbus 72
9700 AB Groningen
Netherlands

European Corporate Governance Institute (ECGI) ( email )

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

Peter Roosenboom

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T09-56
3000 DR Rotterdam
Netherlands
+31 10 40 82255 (Phone)

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Willem Schramade (Contact Author)

Nyenrode Business University ( email )

Straatweg 25
P.O. Box 130
Breukelen, 3620 AC
Netherlands

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