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How Does Takeover Competition Affect the Stock Performance of Targets and Acquirers? Evidence from the European Union

Author

Listed:
  • Kellner Tobias
  • Maltritz Dominik

    (Staatswissenschaftliche Fakulät, Universität Erfurt, Nordhäuser Strasse 63, 99089, Erfurt, Freistaat Thüringen, Germany)

Abstract

We examine the impact of M&A announcements on stock prices of targets and acquirers in the European Union from 2002 to 2021. In line with the literature, we find strong positive returns for the target firms’ stocks, whereas returns are low or insignificant for the acquirers. We contribute to the literature by focusing on the effect of takeover competition and distinguishing between the returns of first and later bids. Accordingly, we confirm strong relationships between subsequent offers and target firms’ stock returns. These returns increase if a second order is made and if the premium related to the second offer is higher.

Suggested Citation

  • Kellner Tobias & Maltritz Dominik, 2023. "How Does Takeover Competition Affect the Stock Performance of Targets and Acquirers? Evidence from the European Union," Review of Economics, De Gruyter, vol. 74(2), pages 161-193, August.
    • Handle: RePEc:lus:reveco:v:74:y:2023:i:2:p:161-193:n:6
    DOI: 10.1515/roe-2023-0058
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    More about this item

    Keywords

    event study; mergers and acquisitions; multiple bids; stock returns; takeover competition; target firm;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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