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Which acquirers gain more, single or multiple? Recent evidence from the USA market

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  • Ismail, Ahmad

Abstract

This study considers shareholder returns using 16,221 US takeovers between 1985 and 2004. It finds that single acquirers out-perform multiple acquirers by 1.66%, and that the gap widens to 5% in equity exchange offers. In contrast to multiple acquirers, single acquirers generate higher returns in equity deals than in cash and mixed offers, due to the high returns earned through the acquisition of non-public targets. Unsuccessful first time acquirers learn but successful first time bidders suffer from hubris behavior in subsequent acquisitions. The study finds that size, relative size, and valuation differences could explain the higher returns for single acquirers, and that the toehold presence leads to paying lower premiums.

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Bibliographic Info

Article provided by Elsevier in its journal Global Finance Journal.

Volume (Year): 19 (2008)
Issue (Month): 1 ()
Pages: 72-84

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Handle: RePEc:eee:glofin:v:19:y:2008:i:1:p:72-84

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Web page: http://www.elsevier.com/locate/inca/620162

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References

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Cited by:
  1. Aktas, Nihat & de Bodt, Eric & Roll, Richard, 2011. "Serial acquirer bidding: An empirical test of the learning hypothesis," Journal of Corporate Finance, Elsevier, Elsevier, vol. 17(1), pages 18-32, February.
  2. Aktas, Nihat & de Bodt, Eric & Roll, Richard, 2009. "Learning, hubris and corporate serial acquisitions," Journal of Corporate Finance, Elsevier, Elsevier, vol. 15(5), pages 543-561, December.

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