INTERNATIONAL MERGERS AND ACQUISITIONS ACTIVITY SINCE 1990
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By Greg Gregoriou, Professor of Finance in the School of Business and Economics, State University of New York, Plattsburgh 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
Description 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.
Audience
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.
Contents Chapter 1 Understanding mergers and acquisitions
Greg. N. Gregoriou and Luc Renneboog
1.1 Introduction
1.2 Historical Background
1.3
Recent M&A Activity
1.4 M&A Clustering: Theory
1.5 Empirical Evidence on M&A Profitability
1.6 Conclusion and overview of the research
presented in this book
Chapter 2 Cross-border mergers and acquisitions: the facts as a guide for international economics
Steven Brakman,
Harry Garretsen and Charles van Marrewijk
2.1 Introduction
2.2 Cross-border M&As: basic characteristics
2.3 Countries and M&As in
2005
2.4 Regional distribution of cross-border M&As
2.5 Countries and M&As over time
2.6 Inequality between cross-border M&As
2.7 Looking
more closely at individual firms that engage in M&A
2.8 Conclusion
Chapter 3 Searching for alpha: which acquisitions create value?
Manolis Liodakis, and Che Pang
3.1 Introduction
3.2 Do takeovers create any value?
3.3 Motives for deals
3.4 Characteristics of value
enhancing acquirers
3.5 Putting it all together
3.6 Conclusion
Chapter 4 Long-term operating performance in European mergers and acquisitions
Marina Martynova, Sjoerd Oosting and Luc Renneboog
4.1 Introduction
4.2 Prior research
4.3 Data and methodology
4.4 Changes in corporate
performance caused by M&As: results
4.5 The determinants of the post-acquisition operating performance
4.6 Conclusion
Chapter
5 Bondholder wealth effects in mergers and acquisitions
Luc Renneboog and Peter G. Szilagyi
5.1 Introduction
5.2 The theory and empirics
of bondholder wealth in M&As
5.3 Do cross-country differences in governance and legal standards matter?
5.4 Conclusion
Chapter 6
Mix and match facilities and loan notes in acquisitions
Marc Goergen and Jane Frecknall-Hughes
6.1 Introduction
6.2 Literature review
6.3 Data sources and sample selection
6.4 Characteristics of mix and match facilities
6.5 Loan notes
6.6 Accounting disclosure and
treatment
6.7 Loan notes – tax choices
6.8 Conclusion
Section 2 The impact of takeover regulation and corporate governance on M&A
activity
Chapter 7 The effect of merger laws on merger activity: International evidence
Arturo Bris, Christos Cabolis, and Vanessa Janowski
7.1 Introduction
7.2 Related literature
7.3 Merger laws
7.4 Merger data
7.5 Domestic and cross-border mergers, and merger laws
7.6 Conclusion
Chapter 8 The governance motive in cross-border mergers and acquisitions
Stefano Rossi and Paolo Volpin
8.1 Introduction
8.2 A simple model of cross-border M&A activity
8.3 Empirical analysis
8.4 Conclusion
Chapter 9 Corporate governance convergence
through cross-border mergers: the case of Aventis
Arturo Bris and Christos Cabolis
9.1 Introduction
9.2 Aventis: Characteristics
and main results
9.3 The merging parties
9.4 The merger: the formation of Aventis
9.5 Corporate governance: Rhone Poulenc, Hoechst
and the French and German
corporate codes
9.6 Corporate governance of Aventis
9.7 Conclusion
Chapter 10 Whither hostility?
William Bratton
10.1 Introduction
10.2 Discipline as a motivation for mergers
10.3 The decline of the hostile takeover
10.4 The
reappearance of hostility
10.5 Conclusion
Chapter 11 Corporate governance and acquisitions: Acquirer wealth effects in the Netherlands
Abe de Jong, Marieke van der Poel and Michiel Wolfswinkel
11.1 Introduction
11.2 Literature review
11.3 Research design
11.4 Results
11.5 Conclusion
Chapter 12
EU takeover regulation and the one share one vote controversy
Arman Khachaturyan and Joseph A. McCahery
12.1 Introduction
12.2 Shareholder democracy
12.3 Economics of ownership and corporate voting: a brief overview
12.4 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 Steen
13.1 Introduction
13.2 Rationale for the squeeze-out right and the sell-out
right
13.3 Squeeze-out right and the protection of private property
13.4 The squeeze-out right and the sell-out right in a comparative
legal perspective
13.5 Conclusion
Section 3 Special types of mergers and acquisitions
Chapter 14 Mergers and acquisitions in IPO markets:
evidence from Germany
David B. Audretsch and Erik E. Lehmann
14.1 Introduction
14.2 Predicting takeover targets: a short review of
the literature
14.3 Data and the sample
14.4 Empirical results
14.5 Conclusion
Chapter 15 Reverse mergers in the UK: listed targets
and private acquirers
Peter Roosenboom and Willem Schramade
15.1 Introduction
15.2 Reverse merger mechanics
15.3 Hypotheses
15.4
Data and methodology
15.5 Empirical results
15.6 Conclusion
Chapter 16 Efficiency and merger activity in the insurance industry
Fabio
Bertoni, Annalisa Croce and Greg N. Gregoriou
16.1 Introduction
16.2 Related Literature
16.3 Research Hypotheses
16.4
Sample and descriptive statistics
16.5 Methodology
16.6 Results
16.7 Conclusion
Chapter 17 The profile of venture capital
exits in Canada
Douglas Cumming and Sofia Johan
17.1 Introduction
17.2 Venture capital exits: theory and prior evidence
17.3
Venture capital in Canada
17.4 The data: exited Canadian venture capital investment, 1991-2004
17.5 Conclusion
Section 4
Irrationality in takeover decision making
Chapter 18 Executive compensation and managerial overconfidence: Impact on risk taking and
shareholder value in corporate acquisitions
Sudi Sudarsanam and Jian Huang
18.1 Introduction
18.2 Alignment of shareholder
and managerial interests
18.3 Managers? behavioural biases and risk taking
18.4 Joint impact of exec compensation and overconfidence
18.5 Joint impact of executive compensation, overconfidence and governance on corporate acquisitions
18.6 Review of recent
empirical studies based on the integrated framework
18.7 Unresolved theoretical and empirical issues
18.8 Conclusion
Chapter
19 Opportunistic accounting practices around stock financed mergers in Spain
Maria J. Pastor-Llorca and Francisco Poveda-Fuente
19.1
Introduction
19.2 Sample and data
19.3 Measuring earnings management
19.4 Accruals pattern around the time of the merger
19.5 Earnings
management and post-merger stock price performance
19.6 Conclusion
Chapter 20 Mergers between energy firms in Europe: champions and
markets
Francesc Trillas
20.1 Introduction
20.2 The issues at stake
20.3 The behavior of target firms
20.4 Expanding firms
20.5
Competition policy and national champions
20.6 Conclusion
Section 5 Valuation of takeovers
Chapter 21 Valuation methods and German
merger practice
Wolfgang Breuer, Martin Jonas, Klaus Mark
21.1 Introduction
21.2 The background of merger processes in Germany
21.3
Basic valuation principles in Germany
21.4 The German Tax CAPM – a Tax CAPM with German income tax
21.5 A valuation example: Merger
valuation of Deutsche Telekom
21.6 Consequences for German takeover practice
21.7 Conclusion
Chapter 22 The impact of cross border
mergers and acquisitions on financial analysts? forecasts: evidence from the Canadian stock market
Alain Coen, Aurelie Desfleurs and
Claude Francoeur
22.1 Introduction
22.2 Conceptual framework
22.3 Measures of financial analysts? forecast errors and data
22.4
Empirical results and analysis
22.5 Conclusion
Chapter 23 Size does matter - firm size and the gains from acquisitions on the Dutch
market
Roman Kraussl and Michel Topper
23.1 Introduction
23.2 Empirical analysis
23.3 Discussion of results
23.4 Conclusion
Chapter 24 Share buy-backs, institutional investors and corporate control
Paul U. Ali
24.1 Introduction
24.2 Buy-back mechanisms
24.3
Myth and reality of buy-backs
24.4 Conclusion
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