International Mergers and Acquisitions Activity Since 1990

Recent Research and Quantitative Analysis


  • Greg Gregoriou, School of Business and Economics, State University of New York, Plattsburgh, NY, USA
  • Luc Renneboog, Professor of Corporate Finance, Tilburg University, The Netherlands, and Research Fellow at the Center for Economic Research and the European Corporate Governance Institute (ECGI), Brussels

It is now a well-know fact that mergers and acquisitions activity comes in waves. The most recent wave, the 5th takeover wave of the 1990s, was characterized by an unprecedented number of corporate restructurings in terms of mergers and acquisitions (M&As), public-to-private transactions, spin-offs and divestitures, and leveraged recapitalizations. Following the collapse of the stock market in March 2000, M&A activity slumped dramatically, but this pause ended in the second half of 2004 when takeover deals occurred again quite frequently. Indeed, some observers wonder whether the 6th takeover wave has started. The takeover wave in the 1990s was particularly remarkable in terms of size and geographical dispersion. For the first time, Continental European firms were as eager to participate as their US and UK counterparts, and M&A activity in Europe hit levels similar to those experienced in the US. Due to its financial impact and the unprecedented activity in Continental Europe, the 5th takeover wave of the 1990s and recent takeover activity (in biotech, utilities, pharmaceuticals) have triggered a great deal of interesting academic research. This volume brings together a selection of insightful papers. An impressive group of international authors address the following themes: takeover regulation; the cyclical pattern of the M&A markets and probable causes and effects; methods to determine the performance of success of M&A actions; cross border deals; means of payment and its effects; studies of hostile bids; high leverage takeovers and delistings.
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Primary audience; academics and researchers in Finance; MBA and MScFinance students; quantitative analysts and M&A practitioners with high quantitative skills investment bankers, lawyers, etc.


Book information

  • Published: May 2007
  • ISBN: 978-0-7506-8289-3

Table of Contents

Chapter 1 Understanding mergers and acquisitionsGreg. N. Gregoriou and Luc Renneboog1.1 Introduction1.2 Historical Background1.3 Recent M&A Activity1.4 M&A Clustering: Theory1.5 Empirical Evidence on M&A Profitability1.6 Conclusion and overview of the research presented in this bookChapter 2 Cross-border mergers and acquisitions: the facts as a guide for international economicsSteven Brakman, Harry Garretsen and Charles van Marrewijk2.1 Introduction2.2 Cross-border M&As: basic characteristics2.3 Countries and M&As in 20052.4 Regional distribution of cross-border M&As2.5 Countries and M&As over time2.6 Inequality between cross-border M&As2.7 Looking more closely at individual firms that engage in M&A2.8 ConclusionChapter 3 Searching for alpha: which acquisitions create value?Manolis Liodakis, and Che Pang3.1 Introduction3.2 Do takeovers create any value?3.3 Motives for deals3.4 Characteristics of value enhancing acquirers3.5 Putting it all together3.6 ConclusionChapter 4 Long-term operating performance in European mergers and acquisitionsMarina Martynova, Sjoerd Oosting and Luc Renneboog4.1 Introduction4.2 Prior research4.3 Data and methodology4.4 Changes in corporate performance caused by M&As: results 4.5 The determinants of the post-acquisition operating performance 4.6 ConclusionChapter 5 Bondholder wealth effects in mergers and acquisitions Luc Renneboog and Peter G. Szilagyi5.1 Introduction5.2 The theory and empirics of bondholder wealth in M&As5.3 Do cross-country differences in governance and legal standards matter?5.4 ConclusionChapter 6 Mix and match facilities and loan notes in acquisitionsMarc Goergen and Jane Frecknall-Hughes6.1 Introduction6.2 Literature review6.3 Data sources and sample selection6.4 Characteristics of mix and match facilities6.5 Loan notes6.6 Accounting disclosure and treatment6.7 Loan notes – tax choices6.8 ConclusionSection 2 The impact of takeover regulation and corporate governance on M&A activityChapter 7 The effect of merger laws on merger activity: International evidenceArturo Bris, Christos Cabolis, and Vanessa Janowski7.1 Introduction7.2 Related literature7.3 Merger laws7.4 Merger data7.5 Domestic and cross-border mergers, and merger laws7.6 ConclusionChapter 8 The governance motive in cross-border mergers and acquisitions Stefano Rossi and Paolo Volpin8.1 Introduction8.2 A simple model of cross-border M&A activity8.3 Empirical analysis8.4 ConclusionChapter 9 Corporate governance convergence through cross-border mergers: the case of AventisArturo Bris and Christos Cabolis 9.1 Introduction9.2 Aventis: Characteristics and main results9.3 The merging parties9.4 The merger: the formation of Aventis9.5 Corporate governance: Rhône Poulenc, Hoechst and the French and German corporate codes9.6 Corporate governance of Aventis9.7 ConclusionChapter 10 Whither hostility? William Bratton10.1 Introduction10.2 Discipline as a motivation for mergers10.3 The decline of the hostile takeover10.4 The reappearance of hostility10.5 ConclusionChapter 11 Corporate governance and acquisitions: Acquirer wealth effects in the NetherlandsAbe de Jong, Marieke van der Poel and Michiel Wolfswinkel11.1 Introduction11.2 Literature review11.3 Research design11.4 Results11.5 ConclusionChapter 12 EU takeover regulation and the one share one vote controversyArman Khachaturyan and Joseph A. McCahery12.1 Introduction12.2 Shareholder democracy12.3 Economics of ownership and corporate voting: a brief overview12.4 Is one share one vote optimal?12.5 Conclusion and policy imlications Chapter 13 Opportunities in the M&A aftermarket: squeezing out and selling out Christoph Van der Elst and Lientje Van den Steen13.1 Introduction13.2 Rationale for the squeeze-out right and the sell-out right13.3 Squeeze-out right and the protection of private property13.4 The squeeze-out right and the sell-out right in a comparative legal perspective13.5 Conclusion Section 3 Special types of mergers and acquisitionsChapter 14 Mergers and acquisitions in IPO markets: evidence from Germany David B. Audretsch and Erik E. Lehmann14.1 Introduction14.2 Predicting takeover targets: a short review of the literature14.3 Data and the sample14.4 Empirical results 14.5 ConclusionChapter 15 Reverse mergers in the UK: listed targets and private acquirers Peter Roosenboom and Willem Schramade15.1 Introduction15.2 Reverse merger mechanics15.3 Hypotheses15.4 Data and methodology15.5 Empirical results15.6 ConclusionChapter 16 Efficiency and merger activity in the insurance industryFabio Bertoni, Annalisa Croce and Greg N. Gregoriou16.1 Introduction16.2 Related Literature16.3 Research Hypotheses16.4 Sample and descriptive statistics16.5 Methodology16.6 Results16.7 Conclusion Chapter 17 The profile of venture capital exits in CanadaDouglas Cumming and Sofia Johan17.1 Introduction17.2 Venture capital exits: theory and prior evidence17.3 Venture capital in Canada17.4 The data: exited Canadian venture capital investment, 1991-200417.5 ConclusionSection 4 Irrationality in takeover decision makingChapter 18 Executive compensation and managerial overconfidence: Impact on risk taking and shareholder value in corporate acquisitions Sudi Sudarsanam and Jian Huang18.1 Introduction18.2 Alignment of shareholder and managerial interests18.3 Managers’ behavioural biases and risk taking18.4 Joint impact of exec compensation and overconfidence18.5 Joint impact of executive compensation, overconfidence and governance on corporate acquisitions 18.6 Review of recent empirical studies based on the integrated framework18.7 Unresolved theoretical and empirical issues18.8 ConclusionChapter 19 Opportunistic accounting practices around stock financed mergers in SpainMaría J. Pastor-Llorca and Francisco Poveda-Fuente19.1 Introduction19.2 Sample and data19.3 Measuring earnings management19.4 Accruals pattern around the time of the merger19.5 Earnings management and post-merger stock price performance19.6 ConclusionChapter 20 Mergers between energy firms in Europe: champions and marketsFrancesc Trillas 20.1 Introduction20.2 The issues at stake20.3 The behavior of target firms 20.4 Expanding firms20.5 Competition policy and national champions20.6 Conclusion Section 5 Valuation of takeoversChapter 21 Valuation methods and German merger practiceWolfgang Breuer, Martin Jonas, Klaus Mark21.1 Introduction21.2 The background of merger processes in Germany21.3 Basic valuation principles in Germany21.4 The German Tax CAPM – a Tax CAPM with German income tax21.5 A valuation example: Merger valuation of Deutsche Telekom21.6 Consequences for German takeover practice21.7 Conclusion Chapter 22 The impact of cross border mergers and acquisitions on financial analysts’ forecasts: evidence from the Canadian stock market Alain Coën, Aurélie Desfleurs and Claude Francoeur22.1 Introduction22.2 Conceptual framework 22.3 Measures of financial analysts’ forecast errors and data22.4 Empirical results and analysis22.5 ConclusionChapter 23 Size does matter - firm size and the gains from acquisitions on the Dutch marketRoman Kräussl and Michel Topper23.1 Introduction23.2 Empirical analysis23.3 Discussion of results23.4 ConclusionChapter 24 Share buy-backs, institutional investors and corporate controlPaul U. Ali24.1 Introduction24.2 Buy-back mechanisms24.3 Myth and reality of buy-backs24.4 Conclusion