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Means of Payment in Takeovers: Results for the UK and US

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Author Info
Franks, Julian R
Harris, Robert
Mayer, Colin

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Abstract

2,500 acquisitions in the United Kingdom and United States are used to examine means of payment in acquisitions. There has been a substantial increase in the proportion of acquisitions financed with cash in the United States over the period of the study from 1955 to 1985. Mixed bids are more common in the UK. Bid premia are significantly larger in cash than equity acquisitions and the differences cannot be wholly attributed to the nature of the bid. Cash acquisitions display a better post acquisition performance than equity. These results bear directly on theories of acquisition finance and cast serious doubt on several commonly cited factors.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 200.

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Date of creation: Sep 1987
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Handle: RePEc:cpr:ceprdp:200

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Related research
Keywords: Acquisitions; Corporate Raiders; Means of Payment; Takeovers;

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References listed on IDEAS
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.:
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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. Abhay Abhyankar & Keng-Yu Ho & Huainan Zhao, 2005. "Long-run post-merger stock performance of UK acquiring firms: a stochastic dominance perspective," Applied Financial Economics, Taylor and Francis Journals, vol. 15(10), pages 679-690, June. [Downloadable!] (restricted)
  2. Charalambos Th. Constantinou & Costas Th. Constantinou, 2003. "The Effect of Board Structure on Bidder-Shareholders' Wealth: Further Evidence from the UK Bidding Firms," ESRC Centre for Business Research - Working Papers wp261, ESRC Centre for Business Research. [Downloadable!]
  3. Jan Bo Jakobsen & Torben Voetmann, 2003. "Post-acquisition performance in the short and long run. Evidence from the Copenhagen Stock Exchange 1993-1997," European Journal of Finance, Taylor and Francis Journals, vol. 9(4), pages 323-342, August. [Downloadable!] (restricted)
    Other versions:
  4. Ahmad Ismail & Ian Davidson, 2005. "Further analysis of mergers and shareholder wealth effects in European banking," Applied Financial Economics, Taylor and Francis Journals, vol. 15(1), pages 13-30, January. [Downloadable!] (restricted)
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