Value Creation through Cross-Border Mergers and Acquisitions. An Empirical Study on European Acquirers of US Targets.
(2009)Department of Business Administration
- Abstract
- The present paper analyzes the valuation effects of geographical diversification by examining mergers and acquisitions involving acquirers from 12 developed European countries and U.S. target firms over the period 1999-2007. Our findings suggest that acquisitions of overvalued U.S. targets do not cause, on average, any significant change in the excess values of European acquirers. However, after controlling for the undervaluation of the targets, we find that acquiring a fairly valued or undervalued company has no statistically significant influence at 10% level, but it is value enhancing at 12% significance level. Besides undervaluation of the target firm, other factors that influence the change in excess value of the acquirer are the... (More)
- The present paper analyzes the valuation effects of geographical diversification by examining mergers and acquisitions involving acquirers from 12 developed European countries and U.S. target firms over the period 1999-2007. Our findings suggest that acquisitions of overvalued U.S. targets do not cause, on average, any significant change in the excess values of European acquirers. However, after controlling for the undervaluation of the targets, we find that acquiring a fairly valued or undervalued company has no statistically significant influence at 10% level, but it is value enhancing at 12% significance level. Besides undervaluation of the target firm, other factors that influence the change in excess value of the acquirer are the cultural difference between the merging firms’ countries (negative impact) and the strength of the bidder’s currency (positive impact). Furthermore, it was found that target firm shareholders experience significant wealth gains of over 25% from the announcement date up until delisting. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/1437444
- author
- Duguleana, Lucia and Dumitrache, Lena Iulia
- supervisor
- organization
- year
- 2009
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Management of enterprises, excess value, international diversification, mergers and acquisitions, Företagsledning, management
- language
- Swedish
- id
- 1437444
- date added to LUP
- 2009-06-04 00:00:00
- date last changed
- 2012-04-02 17:39:29
@misc{1437444,
abstract = {{The present paper analyzes the valuation effects of geographical diversification by examining mergers and acquisitions involving acquirers from 12 developed European countries and U.S. target firms over the period 1999-2007. Our findings suggest that acquisitions of overvalued U.S. targets do not cause, on average, any significant change in the excess values of European acquirers. However, after controlling for the undervaluation of the targets, we find that acquiring a fairly valued or undervalued company has no statistically significant influence at 10% level, but it is value enhancing at 12% significance level. Besides undervaluation of the target firm, other factors that influence the change in excess value of the acquirer are the cultural difference between the merging firms’ countries (negative impact) and the strength of the bidder’s currency (positive impact). Furthermore, it was found that target firm shareholders experience significant wealth gains of over 25% from the announcement date up until delisting.}},
author = {{Duguleana, Lucia and Dumitrache, Lena Iulia}},
language = {{swe}},
note = {{Student Paper}},
title = {{Value Creation through Cross-Border Mergers and Acquisitions. An Empirical Study on European Acquirers of US Targets.}},
year = {{2009}},
}