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Synergy, Agency, and the Determinants of Premia Paid in Mergers

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Author Info
Slusky, Alexander R
Caves, Richard E
Abstract

Hypotheses about the creation of value by mergers are tested on premia paid in a sample of one hundred recent acquisitions. The premia increase with financial, although not with real, synergies and with the scope for "managerial" behavior in the target firms. The acquirers' willingness to pay also increases with their scope for managerial behavior. The presence of either actual and potential rival bidders has a powerful effect, and the authors ascertain that market gains (losses) to acquirers' shareholders do not distort the associations between acquisition premia and sources of value. Copyright 1991 by Blackwell Publishing Ltd.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Industrial Economics.

Volume (Year): 39 (1991)
Issue (Month): 3 (March)
Pages: 277-96
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Handle: RePEc:bla:jindec:v:39:y:1991:i:3:p:277-96

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  1. Haller, Lawrence E., 1995. "The Effects of the Beatrice-Conagra Merger on Brand-level Marketing Strategies," Research Reports 25186, University of Connecticut, Food Marketing Policy Center. [Downloadable!]
  2. Jorge Farinha & Francisco Miranda, 2003. "Run-up, toeholds, and agency effects in mergers and acquisitions: evidence from an emerging market," CETE Discussion Papers 0311, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  3. Andy Cosh & Paul Guest & Alan Hughes, 2007. "UK Corporate Governance and Takeover Performance," ESRC Centre for Business Research - Working Papers wp357, ESRC Centre for Business Research. [Downloadable!]
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