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Value Creation through Cross-Border Mergers and Acquisition - An Empirical Study on UK Acquirers of BRIC Targets

Stephen Dorai, Jeremiah and Patolahti, Lauri (2010)
Department of Business Administration
Abstract
This paper analyzes corporate geographic diversification in an attempt to establish if crossborder
deals involving UK acquirers on BRIC targets over the period 1997-01-01 to 2010-04-
15 are value-enhancing for acquirers and to identify the variables that influence the result.
Our findings suggest that acquisitions of BRIC targets by UK based firms are on average,
value enhancing at the 5% significance level. Factors that contribute to value creation are
acquirer’s excess cash, a combined method of payment, a high market-to-book ratio and
corporate control. Factors that contribute to value destruction are horizontal deals, the size of
the deal, the strength of the bidder’s currency and the cultural difference between the merging
firms’... (More)
This paper analyzes corporate geographic diversification in an attempt to establish if crossborder
deals involving UK acquirers on BRIC targets over the period 1997-01-01 to 2010-04-
15 are value-enhancing for acquirers and to identify the variables that influence the result.
Our findings suggest that acquisitions of BRIC targets by UK based firms are on average,
value enhancing at the 5% significance level. Factors that contribute to value creation are
acquirer’s excess cash, a combined method of payment, a high market-to-book ratio and
corporate control. Factors that contribute to value destruction are horizontal deals, the size of
the deal, the strength of the bidder’s currency and the cultural difference between the merging
firms’ countries. However, our results with respect to determining the explanatory variables
of value creation are statistically insignificant which implies that we cannot make any firm
and concrete conclusions. (Less)
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author
Stephen Dorai, Jeremiah and Patolahti, Lauri
supervisor
organization
year
type
H1 - Master's Degree (One Year)
subject
keywords
Cross-Border, Mergers and Acquisitions (M&A), Brazil-Russia-India-China (BRIC), Event Study and Cumulative Abnormal Returns (CAR), Management of enterprises, Företagsledning, management
language
Swedish
id
1625344
date added to LUP
2010-06-07 00:00:00
date last changed
2012-04-02 18:07:09
@misc{1625344,
  abstract     = {This paper analyzes corporate geographic diversification in an attempt to establish if crossborder
deals involving UK acquirers on BRIC targets over the period 1997-01-01 to 2010-04-
15 are value-enhancing for acquirers and to identify the variables that influence the result.
Our findings suggest that acquisitions of BRIC targets by UK based firms are on average,
value enhancing at the 5% significance level. Factors that contribute to value creation are
acquirer’s excess cash, a combined method of payment, a high market-to-book ratio and
corporate control. Factors that contribute to value destruction are horizontal deals, the size of
the deal, the strength of the bidder’s currency and the cultural difference between the merging
firms’ countries. However, our results with respect to determining the explanatory variables
of value creation are statistically insignificant which implies that we cannot make any firm
and concrete conclusions.},
  author       = {Stephen Dorai, Jeremiah and Patolahti, Lauri},
  keyword      = {Cross-Border,Mergers and Acquisitions (M&A),Brazil-Russia-India-China (BRIC),Event Study and Cumulative Abnormal Returns (CAR),Management of enterprises,Företagsledning, management},
  language     = {swe},
  note         = {Student Paper},
  title        = {Value Creation through Cross-Border Mergers and Acquisition - An Empirical Study on UK Acquirers of BRIC Targets},
  year         = {2010},
}