Who Benefits from Bond Tender Offers in Europe?

34 Pages Posted: 7 Jul 2006

See all articles by Abe de Jong

Abe de Jong

Rotterdam School of Management, Erasmus University; Monash University

Peter Roosenboom

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

Willem Schramade

RSM Erasmus University; Sustainable Finance Factory

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

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-25
Rotterdam, 3000 DR
Netherlands
+31 10 408 1022 (Phone)

HOME PAGE: http://https://www.rsm.nl/people/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

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)

RSM Erasmus University ( email )

P.O. Box 1738
Room T09-53
3000 DR Rotterdam
Netherlands

Sustainable Finance Factory ( email )

18
Rotterdam, 3034 SG
0682011037 (Phone)

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