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

  • Ismail, Ahmad

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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File URL: http://www.sciencedirect.com/science/article/B6W4F-4SBY4V5-7/1/feb0e9dd45edafa6aebdc33d64d664ae
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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
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620162

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  17. Fama, Eugene F & French, Kenneth R, 1992. " The Cross-Section of Expected Stock Returns," Journal of Finance, American Finance Association, vol. 47(2), pages 427-65, June.
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