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Value Creation and Division of Gains in European Horizontal Acquisitions: The Role of Industry Conditions

Author

Listed:
  • Huyghebaert, Nancy

    (Katholieke Universiteit Leuven, 3000 Leuven, Belgium)

  • Luypaert, Mathieu

    () (Hogeschool-Universiteit Brussel (HUB), Belgium)

Abstract

This paper empirically investigates the industry determinants of M&A value creation and the division of M&A gains in a sample of horizontal acquisitions in Europe during the period 19972008. Our results show that industry sales concentration and the ratio of combined target and bidder size relative to the minimum efficient scale in the corresponding industry are significantly negatively associated with shareholder abnormal returns at deal announcement. The relation between industry sales growth and M&A value creation is U-shaped. Industry technological intensity and industry deregulation bear no significant association with M&A value creation, however. Finally, the data reveal that the division of M&A gains between target and bidder investors is determined by firm and deal characteristics rather than by industry conditions.

Suggested Citation

  • Huyghebaert, Nancy & Luypaert, Mathieu, 2010. "Value Creation and Division of Gains in European Horizontal Acquisitions: The Role of Industry Conditions," Working Papers 2010/06, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  • Handle: RePEc:hub:wpecon:201006
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    References listed on IDEAS

    as
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    5. Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    mergers and acquisitions; value creation; announcement return; industry conditions;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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