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The Impact on U.K. Acquirers of Domestic, Cross-border, Public and Private Acquisitions

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Author Info
Robert L Conn
Andy Cosh
Paul M Guest
Alan Hughes
Abstract

We examine the announcement and post-acquisition share returns of 4,000 acquisitions by U.K. public firms during 1984-1998. We include acquisitions of domestic and cross-border targets, and of both publicly quoted and privately held targets. In acquisitions of domestic public targets, abnormal returns are negative over both the announcement and post-acquisition period. In acquisitions of cross-border public targets, abnormal returns are zero over the announcement period but negative over the post-acquisition period. In contrast, acquisitions of both domestic and cross-border private targets result in positive announcement returns and zero long run returns. The main difference between private and public acquisitions is that glamour acquirers experience negative announcement and long run returns in public acquisitions, whereas glamour acquirers do not under-perform in private acquisitions. Furthermore, whereas the under-performance of domestic public acquisitions is limited to acquirers using non-cash methods of payment, acquirers of domestic private targets that use non-cash methods do not under-perform. Overall, cross-border acquisitions result in lower announcement and long run returns than domestic acquisitions. In cross-border acquisitions involving high?tech firms both announcement and long run returns are positive, whilst non-high-tech cross-border acquisitions experience zero announcement returns followed by negative long run performance. Our results also suggest that, in cross-border acquisitions, the national cultural difference between the bidder and target countries has a significantly negative impact on long run returns. This paper replaces WP214.

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Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp276.

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Date of creation: Dec 2003
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Handle: RePEc:cbr:cbrwps:wp276

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Related research
Keywords: Mergers and acquisitions; acquirer share returns; Cross-border targets; private targets;

Find related papers by JEL classification:
F20 - International Economics - - International Factor Movements and International Business - - - General
G30 - Financial Economics - - Corporate Finance and Governance - - - General
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lars Calmfors & Giancarlo Corsetti & Seppo Honkapohja & Gilles Saint-Paul & Hans-Werner Sinn & John Kay & Jan-Egbert Sturm & Xavier Vives, 2006. "Chapter 5: Mergers and Competition Policy in Europe," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 101-116, 03. [Downloadable!]
  2. Lars Calmfors & Giancarlo Corsetti & Seppo Honkapohja & John Kay & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2006. "EEAG European Economic Advisory Group at CESifo: Report on the European Economy 2006," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 1-120, 03. [Downloadable!]
    Other versions:
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