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The European M&A industry: Trends, patterns and shortcomings

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  • Campa, Jose M.

    ()
    (IESE Business School)

  • Moschieri, Caterina

    (IESE Business School)

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    Abstract

    This paper provides a comprehensive overview of the process of European mergers and acquisitions. We characterize the main features of M&A activity in Europe in the period 2001-2007. We review the process of M&A regulatory integration and patterns of activity. Most European M&As still take place among domestic firms, although cross-border transactions are larger in value and have been slightly increasing, especially in regulated industries. Transactions are likely to be friendly, partially negotiated via public tender offers and private deals, and paid in cash, especially for smaller deals. Competing bids are still fairly rare and less likely to be completed. Target shareholders obtain an average premium of around 20% and this premium is slightly declining with deal size. Regulatory differences are large, particularly in the application of takeover regulations, and uncertainty persists in the predictability of the national regulatory agencies.

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    Bibliographic Info

    Paper provided by IESE Business School in its series IESE Research Papers with number D/762.

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    Length: 48 pages
    Date of creation: 03 Sep 2008
    Date of revision:
    Handle: RePEc:ebg:iesewp:d-0762

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    Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
    Web page: http://www.iese.edu/
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    Related research

    Keywords: European cross-border; domestic merger; acquisitions; M&A trends;

    This paper has been announced in the following NEP Reports:

    References

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    1. Martynova, M. & Renneboog, L.D.R., 2006. "Mergers and Acquisitions in Europe," Discussion Paper 2006-003, Tilburg University, Tilburg Law and Economic Center.
    2. José Campa & Ignacio Hernando, 2008. "The Reaction by Industry Insiders to M&As in the European Financial Industry," Journal of Financial Services Research, Springer, vol. 33(2), pages 127-146, April.
    3. Nihat Aktas & Eric de Bodt & Richard Roll, 2007. "Is European M&A Regulation Protectionist?," Economic Journal, Royal Economic Society, vol. 117(522), pages 1096-1121, 07.
    4. Houston, Joel F. & James, Christopher M. & Ryngaert, Michael D., 2001. "Where do merger gains come from? Bank mergers from the perspective of insiders and outsiders," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 285-331, May.
    5. Faccio, Mara & Lang, Larry H. P., 2002. "The ultimate ownership of Western European corporations," Journal of Financial Economics, Elsevier, vol. 65(3), pages 365-395, September.
    6. Healy, Paul M. & Palepu, Krishna G. & Ruback, Richard S., 1992. "Does corporate performance improve after mergers?," Journal of Financial Economics, Elsevier, vol. 31(2), pages 135-175, April.
    7. Raghavendra Rau, P. & Vermaelen, Theo, 1998. "Glamour, value and the post-acquisition performance of acquiring firms," Journal of Financial Economics, Elsevier, vol. 49(2), pages 223-253, August.
    8. Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
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