Advanced

Value Creation through Cross-Border Mergers and Acquisitions. An Empirical Study on European Acquirers of US Targets.

Duguleana, Lucia and Dumitrache, Lena Iulia (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:
author
Duguleana, Lucia and Dumitrache, Lena Iulia
supervisor
organization
year
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},
  keyword      = {Management of enterprises,excess value,international diversification,mergers and acquisitions,Företagsledning,management},
  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},
}