Determinants and shareholder wealth effects of the sales method in acquisitions

Frederik Schlingemann; Hong Wu

doi:10.1016/j.jbankfin.2015.06.017

Determinants and shareholder wealth effects of the sales method in acquisitions

Frederik Schlingemann^*, Hong Wu

^*Corresponding author for this work

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

2 Citations (Scopus)

Abstract

We analyze the sales method for a sample of 575 acquisitions announced between 1998 and 2012 and find that targets choose auctions to maximize the target takeover premium through greater competition and to relax their financial constraints. Auctions, compared to negotiated deals, are associated with significantly higher target announcement returns, especially for relatively small targets. Bidder returns are positively related to auctions for bidders acquiring relatively small targets, not for the full sample. Taking into account size differences, we find that auctions, decrease target gains and increase bidder gains expressed in dollars.

© 2015 Elsevier B.V. All rights reserved.

Original language	English
Pages (from-to)	469-485
Journal	Journal of Banking & Finance
Volume	59
Online published	17 Jul 2015
DOIs	https://doi.org/10.1016/j.jbankfin.2015.06.017
Publication status	Published - Oct 2015
Externally published	Yes

Research Keywords

Sales method
Acquisitions
Auctions
Negotiations

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10.1016/j.jbankfin.2015.06.017

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title = "Determinants and shareholder wealth effects of the sales method in acquisitions",

abstract = "We analyze the sales method for a sample of 575 acquisitions announced between 1998 and 2012 and find that targets choose auctions to maximize the target takeover premium through greater competition and to relax their financial constraints. Auctions, compared to negotiated deals, are associated with significantly higher target announcement returns, especially for relatively small targets. Bidder returns are positively related to auctions for bidders acquiring relatively small targets, not for the full sample. Taking into account size differences, we find that auctions, decrease target gains and increase bidder gains expressed in dollars.{\textcopyright} 2015 Elsevier B.V. All rights reserved.",

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author = "Frederik Schlingemann and Hong Wu",

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pages = "469--485",

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AU - Schlingemann, Frederik

AU - Wu, Hong

PY - 2015/10

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N2 - We analyze the sales method for a sample of 575 acquisitions announced between 1998 and 2012 and find that targets choose auctions to maximize the target takeover premium through greater competition and to relax their financial constraints. Auctions, compared to negotiated deals, are associated with significantly higher target announcement returns, especially for relatively small targets. Bidder returns are positively related to auctions for bidders acquiring relatively small targets, not for the full sample. Taking into account size differences, we find that auctions, decrease target gains and increase bidder gains expressed in dollars.© 2015 Elsevier B.V. All rights reserved.

AB - We analyze the sales method for a sample of 575 acquisitions announced between 1998 and 2012 and find that targets choose auctions to maximize the target takeover premium through greater competition and to relax their financial constraints. Auctions, compared to negotiated deals, are associated with significantly higher target announcement returns, especially for relatively small targets. Bidder returns are positively related to auctions for bidders acquiring relatively small targets, not for the full sample. Taking into account size differences, we find that auctions, decrease target gains and increase bidder gains expressed in dollars.© 2015 Elsevier B.V. All rights reserved.

KW - Sales method

KW - Acquisitions

KW - Auctions

KW - Negotiations

UR - http://www.scopus.com/inward/record.url?scp=84939179878&partnerID=8YFLogxK

UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-84939179878&origin=recordpage

U2 - 10.1016/j.jbankfin.2015.06.017

DO - 10.1016/j.jbankfin.2015.06.017

M3 - RGC 21 - Publication in refereed journal

SN - 0378-4266

VL - 59

SP - 469

EP - 485

JO - Journal of Banking & Finance

JF - Journal of Banking & Finance

ER -

Determinants and shareholder wealth effects of the sales method in acquisitions

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Research Keywords

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