Download This PaperWho Benefits from Bond Tender Offers in Europe?
34 Pages Posted: 7 Jul 2006
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: Suggested Citation
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