Dissertations / Theses on the topic 'Takeovers'

Thesis (Ph. D.)--University of Oregon, 2002.
Typescript. Includes vita and abstract. Includes bibliographical references (leaves 112-118). Also available for download via the World Wide Web; free to University of Oregon users.

Target firms in Australian takeovers are required to obtain an independent assessment of the offer price in situations where the Corporations Law considers the bidder has a superior bargaining position. The intention of this requirement is to protect target shareholders from being offered a lower takeover premium. The only empirical study of expert reports, Eddey (1993), is consistent with expert reports achieving their purpose, as the results indicate no difference in target firm premiums in offers with and without an expert report. Eddey also reports that a revision in offer price is more likely where an expert indicates the bid is �not fair and reasonable.� Using all takeovers from 1990 to 2000, this thesis aims to re-examine and substantially extend the findings in Eddey. As the sample includes all bids, irrespective of the form of payment consideration, the thesis will assess whether the results in Eddey can be extrapolated from cash-based bids to all takeover bids. In addition, the analysis will extend Eddey�s results by investigating whether expert reports result in a higher probability of a revision in offer price relative to takeovers without an expert report. This study also investigates the impact of the expert report on bidder announcement abnormal returns and examines the returns to both bidders and targets when the expert report is released. This will add to the limited current knowledge on the impact of expert reports on the capital market. This thesis also tests the validity of public criticisms of expert independence. Firstly, experts have been publicly criticised on the basis that they are not independent from the target firm. It has been suggested that such experts will be more likely to provide an opinion that agrees with the recommendation of target directors. Secondly, it has been alleged that experts who are also the target auditor provide their reports at a lower fee by cross-subsidising the reports� preparation from other fees received from the client. The concern with this practice is that these reports may be of lower quality. This criticism is tested by developing an expert fee model. This fee model is then used to assess whether, similar to evidence in the auditing field, �quality� experts earn a fee premium. The results indicate that the need for an expert report does not affect bidder abnormal returns at either the announcement of the takeover or release of the expert report. On the other hand, target shareholders earn significantly lower abnormal returns at the announcement of a bid where an expert report is required. This result is inconsistent with Eddey (1993) and raises doubt over whether experts prevent bidders from using their superior bargaining position to offer target shareholders a lower premium. Consistent with Eddey, the probability of an alteration in offer price is greater where an adverse expert opinion is given. The results also show that the presence of an expert increases the likelihood of a bid revision relative to takeovers in general. Target abnormal returns on the release of an expert report are positive and significant, irrespective of the type of expert opinion. This result however, is sensitive to any association between the author of the report and the target. In the case that an expert discloses any prior or current business dealings with the target, abnormal returns are insignificant. The conclusion from this finding is that the market perceives expert reports prepared by an associate of the target as lacking credibility. In light of this lack of information content it is recommended corporate regulators review those experts permitted to prepare reports. Contrary to the published criticisms, experts who have business dealings with the target are just as likely as other experts to provide an opinion that agrees with the recommendation of directors. The tests of a fee reduction by experts associated to the target indicate significant lower fees where the expert is the target auditor. Further analysis shows this result is only significant where the auditor is also a non-Big 6/5 firm. These auditors are also found to provide reports that are significantly shorter than other experts, suggesting the cut in fee is achieved by reducing the amount of effort. The results also find that the top two experts, Grant Samuels and Associates and Price Waterhouse Coopers, earn a fee premium over other experts. The finding of a fee premium for a large accounting firm indicates that such firms may receive a premium for both auditing and non-audit services.

The influence of corporate governance on labour management is one of the key topics of the contemporary academic debate. In particular, there is a growing interest in better understanding the employment effects of takeovers. We investigate this issue in four empirical chapters. The first empirical chapter shows that acquired firms’ prior performance is the key variable in explaining post-takeover workforce adjustments: acquired firms’ poorer performance leads to greater workforce reductions post-merger. Industry relatedness also leads to higher levels of workforce adjustments. However, the results show that hostility does not lead to higher workforce reductions after controlling for other relevant variables. In contrast to prior research conclusions, the results show that high premiums do not induce workforce reductions. These results imply that workforce reductions are undertaken for efficiency improvement purposes. The second empirical chapter shows that acquiring firms’ performance decline may also induce workforce reductions post-merger. At the same time, the results show that workforce reductions are inversely associated with subsequent performance change. This implies that post-merger workforce reductions positively affect firm performance. The third empirical chapter shows that takeover announcement shareholder gains do not explain job losses and wage cuts, although there is some evidence of rent expropriation after hostile and cash-paid acquisitions. In contrast, there is a strong positive association between acquirers’ long-run abnormal returns and post-merger employee wealth concessions. This association suggests that post-takeover jobs and wage growth depends on value created by takeovers: if shareholders gain from takeovers, then employees also benefit from such transactions; if shareholders lose from takeovers, then employees also suffer from them. Finally, the fourth empirical chapter shows that mergers reduce demand for labour. A contribution of this chapter is that it confirms that decline in labour demand is larger after acquisitions that involve layoffs than after acquisitions that do not. This greater decrease in labour demand in layoff-involving acquisitions may justify workforce reductions post-merger. The general conclusion of the thesis is that mergers do not always negatively affect labour and that post-merger employee layoffs are usually undertaken for efficiency improvement purposes.

Within the research area of corporate takeover, understanding the drivers of the choice of payment method is significantly important. This is accrued to the fact that the choice of payment method can affect various aspects of the transaction including shareholders’ value. The choice of payment method in takeovers is mainly a function of both the asymmetric information between the acquirer and the target and the acquirer’s financial capability. This dissertation aims at advancing our knowledge with respect to the effects that different sources of information can have on the choice of payment method in takeovers. More specifically, I first develop two related studies examining the extent to which two important sources of information, firms’ annual reports and firms’ corporate social responsibility performance (CSR) ratings, influence the choice of payment method in takeovers. The first study aims to capture the effect of a more general and publicly available information and the second study aims to shed light on how a more specific and difficult to comprehend set of information affects the choice of payment method in takeovers. Furthermore, motivated by the fact that the choice of payment method has a material impact on the performance of the takeovers and therefore shareholders’ value, I develop the third paper investigating the potential influence that the acquirer’s board of directors and institutional ownership as monitoring mechanisms can have on the choice of payment method in takeovers.

There are various selling mechanisms applied to facilitate takeovers. What determines a seller’s choice of a specific selling mechanism? And what are the consequences of selecting a particular mechanism on takeover outcomes? These are important questions, both theoretically and practically. This thesis investigates two important datasets from the U.K. and U.S. markets, respectively. The first empirical chapter examines two important selling processes in the U.K. market: tender offers and schemes of arrangement. Under tender offer, an acquirer purchases the shares of a target firm directly from the market, without the need of approval from the target’s board. A scheme of arrangement is a court-approved agreement between a company and its shareholders/creditors on the takeover by a potential acquirer. Scheme of arrangement require 75% approval from target’s shareholders with voting powers. Compared with tender offers, schemes are a relatively safe, yet prolonged, way to implement takeovers. This thesis attempts to answer the two questions raised above. To correctly identify the treatment effect of selecting a specific selling process, the selection bias problem need to be addressed. Here the propensity score of matching (PSM) has been adopted to deal with the consequences of self-selection problem into the group that choose scheme of arrangement. Using a sample from takeovers within the U.K. market between 1995 and 2015, this study shows that deals structured through tender offers generate significantly higher premiums for the target’s shareholders in comparison to those structured through schemes. The logit regression results show that the probability of choosing schemes increases if the target firm is larger and more established, or if the target’s termination fees increase, and so on. The results of this study were found to be stable after various robustness tests. The second empirical chapter investigates the two selling mechanisms of auction and negotiation on takeovers using data from the U.S. market. Auction has an obvious advantage in terms of increasing competition when compared to one-on-one negotiation processes. And, therefore, auction is more attractive for a seller; competition between bidders may require the winning bidder to effectively overpay for the target —a phenomenon known as the ‘winner’s curse’. This second chapter investigates the existence of the ‘winner’s curse’ in the context of the U.S. takeover market, with the PSM method applied. Using a sample from the U.S. takeover market during the period between 1984 and 2014, the auction process was found to have a negative impact on bidder returns during the short-event period in comparison to takeovers structured through negotiations. Therefore, the empirical results support the theoretical prediction that the “winner’s curse” exists within U.S. takeover markets. However, the overbidding results become less clear when examined over the long-event period. The logit regression results collected show that the probability of a firm choosing an auction transaction increases if the target initiates the deal, has higher levels of leverage, more tangible assets, faces bankruptcy, or if the bidder already has a ‘toehold’ stake in the target firm. In summary, this thesis studies the determinants of selecting different selling mechanisms in takeovers within U.S. and U.K. markets, and it evaluates the exact effects of selecting a specific mechanism on the outcomes of a takeover by using PSM method to control the self-selection problem.

The upcoming level 3 generation of self-driving vehicles will be characterized by the freedom of not having the driver’s hands on the steering wheel. This acquired freedom is posing new challenges on the traditional passenger comfort paradigm as the drivers will spend a higher amount of time doing non-driving tasks (NDRT). Certain constraints must be imposed as the level 3 generation systems will not be able to drive all the time without active feedback from the user. The driver needs to stay active enough to do takeover in a situation where it is needed to. What effect will different NDRT have on the behavior of a driver in a self-driving car? In our low fidelity driving simulator, we tested different simple actions (e.g. playing a simple 2D game). We then evaluated them based on their accident avoidance and situation awareness in the post-transition period. The results show a significant difference between the reaction speeds of the drivers before and after an active task.

Företagsförvärv är ett fenomen som på senare år ökat markant i Sverige. Med företagsförvärv menas att kontrollen över ett företag överförs från en aktieägargrupp till en annan. Ett sätt att förvärva ett annat företag är genom uppköp. Det finns i sin tur tre olika tillvägagångssätt där fusion utgör ett av dem och som uppstår då två bolag av liknande storlekt går samman under gemensamt ägande. Sammanslagningen sker genom förhandling mellan de olika bolagen och deras aktieägare. De förvärv som sker på fientligt vis kallas för Hostile takeover (fientligt företagsförvärv). Denna form av förvärv är mer vanligt i USA och Storbritannien än i övriga Europa. De flesta fallen av fientliga förvärv görs genom att förvärvaren lämnar ett anbud direkt ämnat till målföretagets aktieägare i hopp om att få köpa deras aktier. Deras mål är att överta kontrollen över företaget utan att blanda in målföretagets ledning eller styrelse, som motarbetar affären. Motiven bakom ett företagsförvärv kan vara många. Exempelvis kan ett företag vilja utöka sin produktportfölj, expandera geografiskt eller nå ut till en ny kundgrupp. I de flesta fallen är det undervärderade företag som inte lyckats maximera sin vinst som utsätts för fientliga bud. Resultatet av ett fientligt förvärv leder oftast till en stor omstrukturering av det förvärvande företaget för att uppnå högre lönsamhet.

För att skydda sig mot att förvärvas på ett fientligt sätt finns det ett antal motåtgärder som ett företags styrelse och ledning kan använda sig av. Dessa motåtgärder bygger på två olika synsätt. Den ena kallas för ledningens självintresse och den beskriver hur ledningen använder sig av de olika motåtgärderna för att rädda sitt eget skinn på bekostnad av aktieägarna. Det andra tankesättet bygger på att ledningen tänker på aktieägarnas bästa vid användande av motåtgärderna. Detta synsätt kallas för aktieägarnas intresse. När vi definierar aktieägarnas aktievärde menar vi på det sätt aktieägarna kan få ut den maximalt möjliga avkastningen vid en specifikt uppkommen situation.

Vår frågeställning i denna uppsatts är hur användandet av de olika motåtgärderna påverkar aktieägarnas aktievärde vid ett fientligt företagsförvärv eller anbud. Syftet är att beskriva detta på ett lättförståligt vis och göra aktieägarna uppmärksamma på att det kan finnas en intressekonflikt mellan aktieägarnas bästa och företagsledningen samt styrelsens bästa. För att möjliggöra denna uppsats har vi studerat litteratur, vetenskapliga forskningsartiklar, sökt på Internet samt utfört intervjuer.

En slutsatts som vi har kunnat dra är att vi skulle vilja skilja på ägarnas aktievärde på kort respektive lång sikt. Vissa av metoderna är bra för att öka värdet för ägandet på kort sikt medan andra metoder är bättre på lång sikt. Vissa motåtgärder är uppenbart dåliga för ägarnas aktievärde. En av våra intervjupersoner, Gunnar Ek på Aktiespararna, erkände han att man utan tvekan kan misstänka att det finns stunder då styrelse och företagsledning tänker mer på sig själva än vad som är bäst för företaget och ägarna. I dessa fall kan vi tydligt relatera till ledningens självintresse sätt. Vi spår även att fenomenet med fientliga företagsförvärv kommer att fortsätta öka i Sverige.

Acquisition of a company is a phenomena that has increased during the latest years in Sweden. Hostile takeovers is a type of acquisitions that are made in a hostile way. The controll of the company is moved from one group of stockholders to another. One way of acqire another company is to buy it. There are three types of procedures of buying a company. Fusion is one, when two companies of the same size becomes one. The fusion precede with negotiations between the companies and the stockholders. The acquires that are made in a hostile way is callaed hostile takeover. These types of acusitions are more common in USA and in Great Britain than in the rest of Europe. In the most common case of hostile takeovers, the acqusitior gives a bid to the stockholders to make them sell their stocks.The acquisitiors intrest is to take over the power of the company, whithout dealing with the board of the company. The aim of the takeover can vary. Maybe the acquisitors want to expand their portfolio of products, reach out over a new market theratory, or get into contact with new customers. The target company for a hostile takeover is often a company that are underestimated and had faild to maximise their profit. A hostile takeover often results in a big change in the company’s organisation to make a better result

When a hostile takeover arise there are several defences that the board or the management can take. These defences are built upon two diffrent approaches. One of them is called the ”Management entrenchment hypothesis”, the board is acting more in their own interest than in the stockholders interests. The other approach is to achieve the stockholders interests. When we define the stockholders interests we mean that way that the stockholders will get the highest possible profit in the specific case.

Our question at issue is in which way the different defences relates to the stockholders interests. The purpose is to describe the relation in an easy way and to make the stockholders aware of that there is a conflict betwwen the interests of the management and the stockholders. During the writing of this article we have studied and used litterature, articles in science and research and the Internet. We have also perform some interviews.

Our conclusion is that we have to seperate the meaning of stockholders interest, depending on wheter it is a short-term interest, or wheter it is a long-term interest. Some defences results in an increase of value in short term, and some in the long-term. also that some of the defences can not been used at all to achieve the stockholders interests. In one of our interviews, Gunnar Ek at Aktiesparana expreses his thought that there is cases in which the board is acting more in their own interest than in the stockholders interests.In this cases we mean that the ”Management entrenchment hypothesis” is used. We also predict that the phenomena hostile takeovers will continue to increase in Sweden

Takeovers are used as a mean for companies to grow and gain entry to new markets. Hos-tile takeovers, apart from the friendly takeovers, is when an acquirer tries to takeover a corporation against the will of management, shareholders and board of directors of the target company. All listed companies run the risk of being a target for a hostile takeover, and to-day many companies are trying to involve actions protecting them from possible threats. Lacking protection can evolve into a costly defense program with actions with fictitious names such as White knight, Pac-man and Poison pills. The purpose with this thesis is to describe and analyze hostile takeovers and hostile takeover attempts in Sweden, and the defense tactics involved in the process.

In this thesis a deductive approach will be used, where theories are used as guidance when searching for explanations. On the basis of the defense tactics described in the theory empirical data has been gathered with the purpose of seeing if the expectations reflect reality, and conclusions about their efficiency. The thesis has used a quantitative research method where the focus is on what, where and when. The aim of the thesis is to classify targeted features and count them, with the intent to construct statistical models with an underlying purpose of explaining what is observed.

The most frequently used defense tactic used by the target company in a hostile takeover in the Swedish market is to attack the logic of the bid. Around 56 percent of the targets in a hostile takeover or a hostile takeover attempt have used this defense tactic to avoid a hos-tile takeover. The aim with an implemented defense tactic is to avoid a hostile bid or making it impossible for the hostile bidder to proceed with the bid and close the deal. The White knight and White squire defense tactic is the most successful defense tactic when it comes to not finalizing the hostile bid, in 90 percent of the cases the deal is not closed if the target chooses to use a White knight as a defense tactic. A secondary objective with a defense tactic is to force the hostile bidder to increase the bid and pay more for the target company. In the Swedish market, the use of Corporate restructuring as a defense tactic has made the hostile bidder to increase the bid in 67 percent of the cases and the use of Positive public information has forced the hostile bidder to increase the bid in more than half of the cases.

The question why these defense tactics are the most frequently used strategies, is explained by two variables. The first one is the cost and simplicity variable, where Attack the logic of the bid and Public information ends up. These defense tactics are cost efficient and can be seen as natural step for the target company when deciding not to approve of the offer made by the acquirer. The second variable is the proven efficiency, where the target knows if implementing this defense tactic the risk of being acquired by the hostile bidder is relatively low, a good example of this is the White knight defense.

The ability of outsiders to gain controlling interest in a firm has a large impact on managerial behavior. This threat has not been wielded in Indian corporations for the most part in spite of there being no direct regulatory hurdles in the execution of the same. This paper seeks to determine the reasons behind the lack of hostile takeover bids in India, as well as analyze the effect on corporate governance. The scrutiny of the Indian corporate sphere leads us to believe that corporate governance is in the process of being codified, but there are numerous motivations already in place to incentivize good managerial behavior, other than the threat of hostile takeover bids.

Motivated by the inadequate research in understanding the determinants of takeover wealth creation, as well as the theoretical and practical importance of information environment in the takeover market, this thesis examines the wealth effects of information environment on UK takeovers. It regards information dissemination as a process inherent in takeover announcements, along which, factors capturing the characteristics of information sender, information content, information recipient and market condition, are addressed to form three key research issues. First considered are the wealth effects of misvaluation conditional on information signalled by payment and financing methods of takeovers. The results indicate that a price run-up via an upward revaluation follows undervalued bidders releasing good news (non-equity financed cash deals). Secondly, this research is concerned with the wealth effects of investor sentiment, towards the information released, at a whole market and individual firm level. The results show that high investor sentiment drives up target firms’ announcement returns and further causes an increase in takeover premium. The last issue addressed is the relation between information asymmetry and gains to frequent bidders. The results suggest that information asymmetry declines in a merger series while serial non-equity financed cash deals generate decreasing bidders’ announcement returns since the scale of their upward revaluations continually decreases with subsequent announcements. These three groups of results form a mechanism of information environment’s wealth effect as follows. Takeover announcements release new information. With the arrival of new information investors update their assessments of firm value. The scale of revaluation is determined by a firm’s information asymmetry, the direction of it depends on firm misvaluation, information signalled by takeover announcements and the investor sentiment in interpreting this information.

Traditionally, minority shareholders are said not to have the right, or the standing, to initiate proceedings against the controllers of the company, because in the eyes of the law the minority shareholders are said not to be the appropriate persons to bring such proceedings, except in the situation of first, fraud on the minority shareholders, and second, controllers' illegal, or arguable, ultra virus act. Such an approach substantially deprives the minority shareholders' of opportunity to have their grievances heard by the courts in takeovers, defined as transactions of corporate control. In turn, the controllers are allowed to ignore the interests of the minority shareholders in such transactions. Therefore, the protection of the minority shareholders and the investors in the capital market fails to be incorporated in the English legal framework for corporate governance. Although statutes were passed in order to remedy inadequate protection of minority shareholders, the judicial interpretation of these statutes also limits the situations where minority shareholders are entitled to the initiation of the proceedings. The remedies available to the minority shareholders are limited to buy-out remedy with a conservative approach in share valuation. The court should broaden the scope of the remedy available to the minority shareholders, including both interim and final remedies. The minority shareholders weakness, both in financial and substantive terms, should be considered against the strength of the controllers in the company. The evidence, knowledge, and sources obtained in administrative investigations or independent inquiries should be made available to the minority shareholders, whereby public and private enforcement would be able to work in tandem against the abuses by the controllers in takeovers. Finally, the appraisal right which is more commonly exercised in the United States should be granted more extensively to the minority shareholders in takeovers where traditionally such a right is not available where the company's shares are traded on national exchanges. The English legal framework should incorporate such a right and allow a more extensive application of it in takeovers, especially in friendly mergers.

The dissertation examines takeovers and horizontal mergers, considering whether or not current policy seems appropriate. Focus lies on both predicted and actual market performance effects. Horizontal mergers are investigated in a product market context and takeovers in an asset market environment. Horizontal mergers. The horizontal merger research is concerned with the relationship of industry concentration and anticompetitive market outcomes. Historically, economists treat concentration and competitive performance as inversely related, and the Department of Justice Merger Guidelines (DOJMG) continue to do so in the screening of mergers to be challenged. Laboratory analysis allows for direct control of variables such as market definition, scale economies, barriers to entry and concentration, thus permitting tests of the potential tradeoff of anticompetitive outcomes and production efficiency due to merger. The experimental design takes both the DOJMG and economic theory into account. When the merged firm enjoys economies of scale, the merger is observed to have a significant impact on industry performance, namely in the competitive direction. The data suggest that if the antitrust authorities rely on the Herfindahl-Hirshman Index (HHI) as measured by sales as opposed to capacity they inappropriately increase the number of cases to be challenged. It remains to be seen whether or not a more useful predictor of the anticompetitive effects of mergers exists. The data indicate that the HHI based on capacity accompanied by an alteration of the policy demarcation line would improve measurement of the effect. Takeovers. The takeover study focuses on two buyout policies, the tender offer and market takeover. The latter policy represents a prohibition of tender offers, but with acquisition attempts permitted via the asset market. Investment and operating skills of management are controlled for by holding profitability of the target firm constant. Laboratory analysis incorporates treatments of certain versus uncertain dividend values. Results suggest that shareholder value added (SVA) is greater when an acquisition is attempted than in its absence, regardless of takeover method or its success. SVA associated with the tender offer and market treatments do not vary significantly under both the uncertain and certain dividend value treatments.

Bakgrund: För att skydda de aktieägare som berörs av uppköpserbjudanden finns detregler för processerna kring dessa. I vissa av dessa uppköpserbjudanden kräverreglerna att målbolaget inhämtar en så kallad fairness opinion där en oberoende partska uttala sig om budets finansiella skälighet för aktieägarna. Skeptikerna tillutlåtandet är många men forskningen på den svenska marknaden, obefintlig. Mycketav kritiken som lyfts fram gäller utgivarnas oberoende och revideringen av takeoverreglerna,som kom år 2009, skärpte kraven kring just oberoende, vilket aktualiserarfrågan kring hur dessa regler fungerar och hur oberoendet ser ut på den svenskamarknaden. Syfte: Syftet med denna studie är att undersöka rollen och framtiden för fairnessopinion, på målbolagets sida, vid offentliga uppköpserbjudanden på den svenskaaktiemarknaden. Genomförande: Studien är av explorativ karaktär och inkluderar 14 kvalitativaintervjuer med utgivare av fairness opinion och andra intressenter med erfarenhet avutlåtandet samt en sammanställning av offentliga uppköpserbjudanden på den svenskamarknaden under åren 2007-2012. Slutsats: Revideringen av takeover-reglerna, år 2009, har haft stor påverkan påmarknaden och bidragit till en ny syn på utgivarnas oberoende och en prispress påfairness opinion. Reglerna lämnar dock en del att önska och vi anser att man börinföra en begreppsmässig distinktion kring utlåtandets användning i olika situationersamt en ökad transparens i utlåtandet för att öka värdet för aktieägarna.Nyckelord: Fairness opinion, uppköpserbjudanden, takeover-regler,värderingsutlåtande, företagstransaktioner
Background: In order to protect shareholders affected by public takeover offers,there are rules regarding the processes surrounding them. In some of these offers, therules require that the target company obtain a fairness opinion where an independentparty evaluates the financial fairness of the offer. The number of fairness opinionskeptics is high but the research on the Swedish market is non-existent. Much of thecriticism concerns the independence of the writers of fairness opinions and therevision of the takeover rules tightened these requirements, which raises questionsabout how these rules work and how independent the Swedish writers are. Aim: The objective of this study is to investigate the role and future of targetcompany fairness opinions in regards to public takeover offers on the Swedish stockmarket. Completion: This is an exploratory study, which includes 14 qualitative interviewswith writers of fairness opinions and stakeholders with experience from fairnessopinions and a compilation of public takeover offers on the Swedish stock marketduring the years 2007-2012. Conclusion: The revision of the takeover rules, in 2009, has had a major impact onthe market and contributed to a new view of the independence of publishers and apricing pressure of fairness opinions. The rules, however, leaves some things to bedesired and we reckon that there should be a conceptual distinction between thedifferent situations of fairness opinions, as well as greater transparency in thestatement to increase shareholder value.Keywords: Fairness opinion, public takeovers, takeover rules

A takeover announcement does not necessarily mean good news for stockholders of the acquiring firm. In fact, for a majority of takeovers it means losses in share prices. Motives that can explain this trend are agency and hubris. This thesis is an event study of 28 acquir-ing firms in Sweden between the years 1997-2005, and the purpose is set to see whether stock prices are affected or not. This has been done by the help of the market model. The empirical results show that the takeovers are on average value decreasing operations which indicate that agency and hubris are the primary motives even though one can not for cer-tain exclude synergy.

Democracies worldwide are facing a third wave of autocratization, in which a new model tactic has emerged to end democracies. During previous waves coup d’état have been the main reason why democracies breakdown. However, they do still occur during the third wave of autocratization, but previous research has focused on theoretically develop the reasons for why coups occur through focusing on the military and specific regions. In addition, various definitions exist regarding coup d’état, and as a result, its definition has become fragmented, which has had real-life implications. The Capitol Insurrection that occurred in the United States on January 6th, 2021, introduced an unprecedented attack on one of the world’s most prominent and noticeable democracies, intending to overturn the 2020 Presidential Election. The Capitol Insurrection has been defined as a domestic terrorist attack and, thus, not an attempted takeover. Therefore, this thesis aims to analyze the concept of coup d´état to develop the understanding of takeover attempts in democracies. In addition, it aspires to theoretically develop the concept of takeovers in democracies through applying a multiple-case design consisting of three cases that have been defined as coups and three cases that follow the new tactic used in the third wave of autocratization. The thesis summarizes the previous definitions and explanations regarding takeovers and applies that to analyze how and what characterized the six cases. In addition, the findings of the six cases are compared to the previous definitions to analyze what speaks for and against a broadened definition of a takeover. The analysis of this thesis finds and argues for that there is a need to redefine the model tactic during the third wave of autocratization to a type of takeover performed by the chief executive and political elites, in other words, performed by the government for government.

In four empirical chapters, matching analysis is employed to estimate the effects of specific contractual and regulatory arrangements on particular deal outcomes in the UK takeover market. The first chapter highlights the positive effect of earnout financing on the acquiring firms' returns in private target acquisitions. Furthermore, this chapter offers a detailed example of how the non-parametric Propensity Score Matching, despite its growing popularity in financial research, can lead to inaccurate inferences when relevant private-target-specific factors are omitted from the analysis. The second chapter provides the first empirical examination of the effect of the earnout's terms on the premium offered to the target firm's shareholders, and how information asymmetry concerns influence this premium. Additionally, the findings indicate that increases in the premia are negatively interpreted by the market in non-earnout financed deals. However, this negative effect is neutralised in comparable earnout financed deals. The third chapter provides the first empirical contribution that highlights the deal- and firm-related factors that contribute to the growing reliance on the Scheme of Arrangement, as a substitute for the Contractual Offer, in conducting UK public target deals. Despite the concerns raised in the legal literature about the limited bargaining power of the target shareholders under the Scheme, the robust conclusions indicate that such shareholders manage to receive premia that are at least as high as the premia received by shareholders in comparable Offer deals. The fourth chapter employs a hand-collected dataset that covers the incidences of termination fee use in the UK takeover market. The main result is that, in the period preceding the ban that The Panel on Takeovers and Mergers had imposed on termination fees, the inclusion of these fees had a beneficial, or at worst neutral, effect on target shareholders' wealth. Consequently, it is recommended that the Panel ends its ban.

Motivated by the plethora of theories in explaining the conflicting evidence on the acquiring firms’ profitability after a merger, this thesis examines how market conditions affect the most prominent takeover motives and the acquirers’ abnormal returns and analyse changes in acquiring firms’ default risk around the announcement on four different types of diversification. In the takeover process, information asymmetry holds a very central role, along with other firm and deal variables which release new information in the market and alter investors’ views. Further, market conditions around the announcements significantly affect not only the takeover activity but also investors’ beliefs and optimism which will eventually drive the acquirers’ stock prices. We first investigate the main takeover motives by analysing the wealth creation of the acquiring, the target firm and their combined gains. Firms react to both internal and external conditions by restructuring their business and takeovers are the fastest strategy to do so. Consequently, we re-examine takeover motives by incorporating the potential influence of market conditions (i.e. market misvaluation and merger waves). The results indicate that value increasing acquisitions are driven by both synergy and hubris, while value decreasing acquisitions by managerialism, after controlling for the hostility of the deal and extreme market valuations. We then turn our attention to the diversification benefits of mergers; although recent evidence suggests that mergers increase default risk for the acquiring firms, we find that due to the less uncertainty around horizontal mergers, acquirers can actually enjoy the risk-reducing diversification benefits of this related type of merger. Finally, we investigate how firm, market and industry valuation errors affect acquires performance in the UK market, after we control for multiple deals, method of payment and target type. Results suggest that although firm and deal characteristics help investors to revalue the potentials of an acquisition, investors are more likely to base their views on the state of the market/industry or the value of the firm and this will in turn drive the acquiring firms’ abnormal returns.

Mergers and acquisitions (M&A) can be either “hostile” or “friendly” in nature. This study looks at the corresponding long-term investment performance of “hostile” and “friendly” takeovers within the mining sector, pre and post the takeover of targets, with the aim to investigate whether there are statistically significant differences about which the investor community should be aware.36 months of monthly share price performance, pre and post first formal merger/takeover announcement date, are studied, for each acquirer is compared with the bourse mining index to calculate the percentage time the acquirer outperforms the market (mining index). Research of the major mining stock exchanges of the world – New York, Toronto, Australia, London and Johannesburg – reveals that the investment performances of “hostile” acquiring mining companies, pre first formal announcement date, are statistically significantly greater than post first formal announcement date. No statistically significant difference was found pre and post first announcement date for “friendly” acquiring mining companies. Although clear differences in post first formal announcement date investment performance are noted between “hostile” acquirers and “friendly” acquirers, there is no statistically significant difference between the investment performances of “friendly” versus “hostile” acquirers.
Dissertation (MBA)--University of Pretoria, 2010.
Gordon Institute of Business Science (GIBS)
unrestricted

Fientliga företagsförvärv har under en lång tid varit en del av den globala finansmarknaden och är numera inte främmande för de svenska aktörerna. Ett företagsförvärv blir fientligt när bolagets styrelse råder aktieägarna att avslå det framlagda budet. Är budet intressant för aktieägarna, som ofta strävar efter att maximera sin kapitalvinst, kan det dock lätt uppstå en intressekonflikt inom bolaget då styrelsen, till skillnad från aktieägarna, är snarare intresserad av att behålla sin makt och anställning. Detta kan resultera i att styrelsen blir frestad att vidta åtgärder för att förhindra uppköpet.   I samband med fientliga uppköpserbjudanden har det på den amerikanska aktiemarknaden utarbetats en rad försvarsåtgärder som kan vidtas av bolagsstyrelsen i syfte att försvåra eller förhindra ett företagsförvärv. På den svenska aktiemarknaden är vidtagande av åtgärder som har till syfte att förhindra eller försvåra att ett uppköpserbjudande framläggs eller genomförs icke tillåtna enligt 5 kap. 1 §             lagen om offentliga uppköpserbjudanden på aktiemarknaden (LUA). Motiveringen till detta förbud framkommer i bland annat Aktiemarknadsnämndens uttalande AMN 2005:47:”ett offentligt erbjudande anses vara en angelägenhet mellan målbolagets aktieägare och budgivaren, varför målbolagets styrelse inte ska tillåtas försämra förutsättningarna för att ett erbjudande lämnats”. Av denna anledning har styrelsen i ett målbolag som är ett aktiebolag en relativt svag position, då den beslutsfattande makten är hos de enskilda aktieägarna vid exempelvis antagandet av ett framlagt bud och hos bolagsstämman avseende vidtagande av eventuella försvarsmetoder. Dock har det genom AMN:s uttalanden framkommit i en rad praktiska fall att målbolagets styrelse hittat möjligheter att agera och i viss mån kringgå förbudet.   Uppsatsen är en komparativ studie med den svenska och amerikanska rättregleringen i fokus. Paralleller och samband dras även mellan det svenska, europeiska och engelska systemet. Syftet med arbetet är att undersöka svenska företagsledningarnas möjligheter och handlingsutrymme vid tillämpning av internationella försvarsmetoder för att avvärja ett oönskat uppköpserbjudande. I uppsatsen undersöks även de åtgärder som kan vidtas i ett preventivt syfte.   Möjligheten till genomförandet av ett bolagsuppköp är ett nyckelmoment för skapandet av en effektiv värdepappersmarknad där svaga bolag upphör att existera och starka bolag har utvecklings- och tillväxtmöjligheter. Att avgöra vad som stämmer överens med god sed kan dock bli problematiskt, då regleringen på området är oerhört spridd och i viss mån inkoherent. Trots dessa svårigheter har det i praktiken genomförts ett antal företagsuppköp som har visat på att tillämpningen av försvarmetoder är i viss utsträckning möjlig om den går att motivera genom att bolagets eller/och aktieägarnas intressen tillgodoses. Enligt aktiebolagslagen (ABL) är föremålet för aktiebolagets verksamhet att ge vinst till fördelning för aktieägarna. Samtidigt är aktieägarnas förtroende centralt för väl fungerande värdepappersmarknader. En mer omfattande rätt för bolagsstyrelsen i målbolaget att fatta beslut om försvarsåtgärder skulle kunna skada dessa grundläggande ändamål med ABL och den börsrättsliga regleringen. På så sätt skulle en betydligt större makt hos bolagsstyrelsen kunna ha en skadlig effekt, då det är aktieägarnas vinster och förtroende som bör prioriteras. Genom att analysera samspelet mellan de bolagsrättsliga och börsrättsliga principerna och relevanta praktiska avgöranden går det att se att den nationella regleringen är konstruerad på bästa möjliga sätt för att upprätthålla en god sed på den svenska finansmarknaden, trots sina potentiella brister i sammanhanget.
Hostile takeovers have for a long time been a part of the global financial market and are nowadays not an unknown phenomenon on the Swedish stock market. A takeover attempt becomes hostile when the board of directors of the target advises the shareholders to reject the submitted bid. That particular situation can, however, easily become the reason for conflict of interests within the company. The bid can be valuable for the shareholders, who primarily seek ways to maximize their profit at the same time, as the members of the board of directors desire to keep their employment and position within the company. The board can therefore as a result be willing to take action in order to prevent the takeover.   During the mid-20th century, due to a takeover-wave, the American stock market developed a series of defence measures that could be used by the board in order to impede or prevent an acquisition. However, measures that are intended to prevent or impede a takeover offer are prohibited on the Swedish stock market under Ch. 5 § 1 in the Act on Public Takeover Offers. The justification for this prohibition is found in, inter alia, the Swedish Securities Council's (Aktiemarknadsnämnden) statement AMN 2005: 47 where they indicated that a public offer is considered to be a matter between the target company's shareholders and the bidder, why the offeree company should not be allowed to impair the prerequisites for an offer submitted. For this reason, management has a relatively weak position in Swedish corporations, since the decision-making power is not with the board but with the separate shareholders when it comes to accepting a potential bid or the shareholders’ meeting of the corporation when a decision must be made if measures should be enact in order to prevent a bid. However, the boards of directors in some target companies have found opportunities to act and to some extent circumvent the ban posed in the Act on Public Takeover Offers.   The thesis is a comparative study with Swedish and American legal regulations in focus. Parallels are also drawn between the Swedish, European and English systems. The aim is to investigate the ability of the board of directors in Swedish corporations to use different defence methods to fend off an unwanted takeover bid. The paper also examines the measures that can be taken before the bid and as a result have a preventive function.   The possibility of implementing a company takeover is a key element for the creation of an efficient financial market in which weak companies cease to exist and strong companies have development and growth potential. A determination on what actions can be consistent with good practice can be problematic, since the regulations in this area are extremely widespread and somewhat incoherent. Despite these difficulties, the legal practice in this area has shown that the application of the defence methods is to some extent possible if the board of directors focus on supporting the will to defend the company and / or shareholder interests. To give the board of directors extended powers could have a detrimental effect on profits and trust. By analysing the interaction between the principles in company law and securities law as well as some relevant decisions by the Swedish Securities Council, it is possible to see that the Swedish national regulation is designed in the best possible way to maintain good practices on the Swedish stock market despite some shortcomings.

Syftet med den här magisteruppsatsen är att undersöka hur tillkännagivandet av företags-förvärv påverkar aktieavkastningen på ett uppköpande bolaget. Testet är begränsat till före-tag som enbart är listade på Stockholmsbörsen under perioden 1996 till 2005. För att testa onormal avkastning användes marknads modellen. Resultatet visade att tillkännagivandet av företagsförvärv har en signifikant effekt på avkastningen för aktien för det bolag som ska förvärva. Majoriteten av uppköpande bolag upplevde en negativ onormal avkastning under test perioden (100 dagar före tillkännagivandet och 100 dagar efter).

The purpose of this master’s thesis is to examine the effect a corporate takeover an-nouncement has on share prices for acquiring companies. The test will only involve com-panies listed on the Stockholm Stock Exchange during the period 1996 to 2005. To test the effect an announcement has, abnormal return for a period before and after the takeover announcement was calculated. The findings from the testing showed that takeover an-nouncements have a significantly impact on shareholder return. The majority of acquirers in the sample had negative average abnormal returns during the event period (100 days prior to the announcement and 100 day after).

This thesis examines the role of market micro-structure and communication in takeovers that involve shareholders' investment decisions and the selection of a takeover mechanism by a raider under asymmetric information. For this purpose, rational expectations equilibrium models are employed and examples are worked in detail.
In the context of market micro-structure, it is shown that there is a greater probability of success of a takeover when the shareholders are risk averse that when they are risk neutral, and the probability that a takeover succeeds is related non-positively to the fraction of shares held by the raider.
In order to study communication, two takeover mechanisms are studied which are tender offers and negotiated takeovers. A negotiated takeover allows for communication between the shareholders and the raider before any takeover announcement. It is shown that communication offsets partially the negative impact of risk aversion on the probability that a hostile takeover occurs.

Despite the financial and economic crisis, the high-tech industry has experienced a consistent activity in terms of mergers and acquisitions during the last ten years. Such interest seems still solid as deals continue to hit the headlines of business newspapers. This paper aims at exploring the takeover market focusing on the acquisition of high tech companies during the 2006-2016 decade. We compare the acquisition performed by incumbents competing in the same field, with those undertaken by companies coming from other sectors. Companies willing to acquire or merge another company, are driven by different rationales: the securement of new skills to strengthen their offer and improvement the efficiency of their internal processes belong respectively to the so called horizontal-merger and vertical-merger. An alternative purpose behind the decision to combine two entities lies in the company’s intent to diversify its business, often identified in the literature as conglomerate-merger or diversification-merger. The first hypothesis is that conglomerate-mergers struggle to capitalize the benefits deriving from the synergies -if any, exhibiting weaker stock market reaction across the day of the announcement and inferior performance in the aftermath. The second hypothesis is that, due to company’s overvaluation, the post mergers company’s performance is not worth the premium price paid by the acquirer. Hence, we expect a negative relationship between the performance metrics and the additional price over the target’s book value, invested by the acquirer to finalize the deal Finally, we test if the lack of performance expected from the combination of the two organizations is limited by the lack of knowledge exhibited by the acquirer’s management board. Since the high tech sector evolves at fast pace, acquirer’s management lack in IT knowledge, skill, and experience make it incapable to sustain the development of the acquired company

This Master's Thesis is a comparative study of the regulation of defensive measures in hostile takeovers. It consists of two main parts: In the first, the subject is approached from a theoretical point of view. The relevant factors for the regulation of defensive measures are outlined and analysed, followed by a discussion of the different ways of drafting such rules. This part concludes with a proposition concerning the most favourable form and content of a regulation. The second part describes hostile takeover regulation in the US, the UK, Canada, the EU and Germany, showing the diversity in that field of regulation in practice and the underlying reasons. It highlights and assesses the characteristics of each country and its regulation in the light of the considerations made in the first part, and provides an outlook concerning the future development of the regulation of defensive measures in hostile takeovers.

Taking a sociological perspective on the market for corporate control this thesis calls into question financial capitalism with its preference for clear shareholder-value governance of the corporation. The institutional setting chosen to show this is Sweden, with its particularly shareholder friendly governance regime and its very active takeover market. To this is added three longitudinal case studies of cross-border hostile takeover processes during the sixth takeover wave in Europe. These reveal that the success of cross-border hostile bids has little to do with the theory of the market for corporate control, as a market where contests enable “good managers” to win over “bad managers”, with the overarching goal of enhancing wealth creation for society at large. Instead the most successful actors on a market for corporate control are those who best understand that market’s power dynamics – including the use of regulatory and moral arbitrage between different national frameworks and the leveraging of short-termism of institutional investors. The case studies are then analyzed in relation to the revised Swedish takeover rules of 2009. This shows that the revision did not address the problems detected, focusing instead on enhancing deal making and further limiting the board’s ability to work for long term value creation. As a whole this thesis calls for a development of a theory of a market for corporate control that in a more sustainable way will enable board of directors to focus on the corporation as value accretive entity. Sophie Nachemson-Ekwall has conducted her PhD work at the Stockholm School of Economics and is today a researcher
at the Center for Management and Organization at the Stockholm School of Economics Institute for Research (SIR). She has a background as a prize winning financial journalist for over 20 years and has co-authored three books about delicate issues in large Swedish corporations.

Diss. Stockholm : Handelshögskolan, 2012

Purpose: The purpose of this thesis is threefold. First, it carries out an assessment on the extent to which takeovers impact on the interests of employees, suppliers and senior management. Second, the primacy enjoyed by shareholders during takeovers is subject to scrutiny to determine whether their decision making powers can be rightly exercised to the detriment of the target company and its non-shareholding stakeholders post-takeover. This would determine whether calls to reform Rule 21 of the Takeover Code 2013 (the board neutrality rule) are justified. Third, in light of the empirical evidence carried out and findings from two case studies (Corus Steel and Cadbury), two reform proposals (the board-centric model and disenfranchisement of short-term shareholders’ voting rights) are critically examined. The aim is to find the most appropriate way of reforming the board neutrality rule, taking into consideration the opinions of the business community and academics, in order to offer more protection to employees, senior management and creditors’ interests during takeovers. Design/Methodology/Approach: This is a legal study that encompasses theoretical and empirical analysis of takeovers and their relationship with society and the state in a rapidly changing social and commercial landscape. It also assesses the experience of those affected by the process of law, for example employees who may find themselves disadvantaged by the operation of shareholder primacy during takeovers. Legal research has its theoretical and methodological base primarily in social sciences and this is why methodologies used in this study such as case study analysis and theoretical conceptualisations are mainly empirical and social-theoretical. Doctrinal analysis is also relied on when analysing case law and forms part of the wider discussion. Case studies on two formerly British companies (Corus Steel and Cadbury) which were taken over by foreign companies are also used. A case study methodology was selected, after considering all alternative methods, because it traces an event from its initiation until its completion and even beyond, in the process mapping all the important developments. For both Cadbury and Corus, the method helped to highlight how the takeovers impacted on the interests of employees, senior management and suppliers, and the predatory role played by arbitrageurs (short-term investors) during the offer period. Findings: Based on the findings from Cadbury and Corus case studies and the study as a whole, takeovers have an adverse impact on the interests of employees, senior management and suppliers while the target company’s shareholders stand to earn a premium on their shares. A sign of a takeover pulls arbitrageurs to buy the target company’s shares, no matter how inflated, in hope of a takeover deal. Since the decision making powers during takeovers lie in the hands of target company shareholders, they are unlikely to turn down a premium offer, regardless of the impact it may have on the interests of non-shareholding stakeholders such as employees. Both existing empirical studies and case studies on Cadbury and Corus showed that takeovers have a detrimental effect on the interests of non-shareholding stakeholders post-takeover. In light of these findings, two alternative regulatory models were considered: (1) disenfranchisement of short-term shareholders’ voting rights; and (2) adoption of a board-centric model of takeover regulation such as the Delaware model. After critically examining the two models, there was insufficient evidence to justify a fundamental change of UK takeover regulation to either model. A more appropriate solution was to give incentives to shareholders to think and act long-term such as strengthening the stewardship responsibilities under the Stewardship Code 2012. Originality/Value: This study contributes to a growing body of research on shareholder primacy under takeover law by providing empirical evidence on the relationship between takeovers and the impact on the interests of non-shareholding stakeholders. It also examines the role played by short-term shareholders in exercising their decision making powers during the offer period and considers specific reform proposals. This study aims to provoke legal reform that would lead to more protection for non-shareholding stakeholders during takeovers. Thus, this study will inform the academic and business community as well as policy makers in the UK on the impact of takeovers on company constituents post-takeover and the way forward in protecting non-shareholding stakeholders’ interests from potentially harmful takeovers.

In three papers, I employ parametric and nonparametric methods in order to further examine the determinants of value creation in M&A deals financed with contingent earnout payments. The first paper investigates the short-run wealth effects of earnouts in deals in which financial advisors are counseling the acquiring firms. The results suggest that relative to using non-earnout payments, acquirers enjoy higher abnormal returns from earnout use only when consulting financial advisors. Specifically, once accounting for potential selection bias, advised earnout-financed deals significantly outperform deals that are financed with: (a) earnouts without the involvement of financial advisors and (b) non-earnouts regardless of the involvement of financial advisors. Thus, the likely ability of financial advisors to efficiently address the inherent complexities of the design of earnouts leads to greater acquirer gains. The second paper examines the impact of the acquiring firm's informational environment on the announcement period wealth effects of earnout-financing. The results suggest that under increased information asymmetry over the acquiring firm, the market's reaction to an earnout-financed deal mainly reflects its inference that the acquirer's stock is underpriced, rather than the deal's synergy potential. To this end, earnout acquirers are illustrated to be relatively undervalued prior to the deal's announcement. In contrast, the selection of earnouts by big acquirers with low information asymmetry sends a strong signal for value creation that also prevents market participants from inducing a size-related discount. Lastly, the third paper investigates the wealth effects of earnouts in international changes of corporate control. The results suggest that when firms choose to join a multinational network through the acquisition of a foreign company earnout-financing offers a major value-creating opportunity yielding greater announcement period abnormal returns to acquirers relative to domestic and remaining cross-border deals. In contrast, the likely presence of agency problems and monitoring costs appears to deteriorate the expected synergy gains from non-initial earnout-financed international M&As.

This dissertation focuses on two central capital market transactions, takeovers and initial public offerings (IPOs), from both a theoretical and an empirical point of view. After an introductory chapter, the first two chapters analyse how minority shareholders are affected by a change in take-over regulation (introduction of the mandatory bid rule) in Germany in 1995. The last chapter focuses on the pricing and timing of going-public transactions. Chapter 2 focuses on the absolute wealth effect of the mandatory bid rule and formalises the trade-off minority shareholders of corporate raiders face with respect to the adoption of a mandatory tender offer after a shift in control. Under plausible assumptions about the distribution of security and control benefits, minority shareholders of acquirers profit from the adoption of the mandatory bid rule. A subsequent empirical study supports this hypothesis by measuring the stock price effects after the acceptance of the German Takeover Code. Chapter 3 uses a dataset of German dual-class shares during 1988-1997 to study how the change of corporate governance rules affects the price differential between voting and non-voting stock. First, the chapter discusses how mechanisms to separate control from cash-flow rights relate to the value of control. Second, the chapter analyses how minority voting and non-voting shareholders participate in transfers of corporate control under the alternative regulatory structures pre- and post- 1995. By providing an analysis of sequential going-public decisions. Chapter 4 outlines conditions under which the likelihood of a second IPO increases after a first firm has gone public ('hot issue markets'). Two effects can trigger the rise of hot issue markets in a setting with asymmetric and costly information about both firm quality and industry prospects: risk-induced selling pressure and informational free-riding on the industry news conveyed by a first IPO. Finally, the model offers an explanation for the empirical finding that hot issue markets exhibit a higher degree of underpricing than cold issue markets.

This thesis contains an analysis of the impact on shareholder wealth of domestic and cross-border takeover bids for UK listed companies. The study covers the calendar years from 1986 to 1991 inclusive. For the cross-border acquisitions, data is available for an analysis of 143 targets, 71 bidders, and 55 matched pairs of targets and bidders. For domestic acquisitions, data was available for 568 targets, 414 bidders and 356 pairs of targets and bidders. Three different event study methodologies are applied; the capital asset pricing model, the market model, and the index model. UK target companies gained significantly from both domestic and cross-border takeover bids. Over the period from eight months prior, to one month after, the month of the bid announcement (t-8, t+1), cumulative abnormal returns exceeded +20.2% in cross-border and +16.6% in domestic acquisitions. Both domestic and overseas bidders underperformed during the five month period following the bid announcement. However, over the whole analysis period (t-8, t+5), UK bidders performed significantly better than overseas bidders. Analysis of joint abnormal returns to pairs of targets and bidders reveals that both cross-border and domestic acquisitions in the UK during the 1986-1991 period created significant shareholder wealth. However, the gains to target shareholders exceed the total gain, thus resulting in a transfer of wealth from bidders to targets.

This study explores the accuracy and valuation implications of the application of a comprehensive list of equity multiples in the takeover context. Motivating the study is the prevalent use of equity multiples in practice, the observed long-run underperformance of acquirers following takeovers, and the scarcity of multiplesbased research in the merger and acquisition setting. In exploring the application of equity multiples in this context three research questions are addressed: (1) how accurate are equity multiples (RQ1); which equity multiples are more accurate in valuing the firm (RQ2); and which equity multiples are associated with greater misvaluation of the firm (RQ3). Following a comprehensive review of the extant multiples-based literature it is hypothesised that the accuracy of multiples in estimating stock market prices in the takeover context will rank as follows (from best to worst): (1) forecasted earnings multiples, (2) multiples closer to bottom line earnings, (3) multiples based on Net Cash Flow from Operations (NCFO) and trading revenue. The relative inaccuracies in multiples are expected to flow through to equity misvaluation (as measured by the ratio of estimated market capitalisation to residual income value, or P/V). Accordingly, it is hypothesised that greater overvaluation will be exhibited for multiples based on Trading Revenue, NCFO, Book Value (BV) and earnings before interest, tax, depreciation and amortisation (EBITDA) versus multiples based on bottom line earnings; and that multiples based on Intrinsic Value will display the least overvaluation. The hypotheses are tested using a sample of 147 acquirers and 129 targets involved in Australian takeover transactions announced between 1990 and 2005. The results show that first, the majority of computed multiples examined exhibit valuation errors within 30 percent of stock market values. Second, and consistent with expectations, the results provide support for the superiority of multiples based on forecasted earnings in valuing targets and acquirers engaged in takeover transactions. Although a gradual improvement in estimating stock market values is not entirely evident when moving down the Income Statement, historical earnings multiples perform better than multiples based on Trading Revenue or NCFO. Third, while multiples based on forecasted earnings have the highest valuation accuracy they, along with Trading Revenue multiples for targets, produce the most overvalued valuations for acquirers and targets. Consistent with predictions, greater overvaluation is exhibited for multiples based on Trading Revenue for targets, and NCFO and EBITDA for both acquirers and targets. Finally, as expected, multiples based Intrinsic Value (along with BV) are associated with the least overvaluation. Given the widespread usage of valuation multiples in takeover contexts these findings offer a unique insight into their relative effectiveness. Importantly, the findings add to the growing body of valuation accuracy literature, especially within Australia, and should assist market participants to better understand the relative accuracy and misvaluation consequences of various equity multiples used in takeover documentation and assist them in subsequent investment decision making.

This thesis attempts to address the crucial issue of the appropriate role of corporate boards in response to hostile takeover bids. In such circumstances, directors face an obvious conflict of interests: since they might lose their jobs and benefits once the acquisition is completed, they may use their corporate powers to erect takeover defenses or to simply veto the offer. As a matter of doctrine, the debate falls into two schools of thoughts. The managerialist school supports that boards should be permitted to erect defenses and/or veto on the grounds that directors are better placed to protect the interests of shareholders whereas the shareholder choice school relies on the conflict of interest to support boards' passivity. As a matter of practice, the U.S. system adopts an approach that is more consistent with managerialism, while the recent European takeover directive advocates in essence that shareholders are the only ones that should take the ultimate decision. At the end of the day, we must ask ourselves “What's best for shareholders?”
Pléthore d'hypothèses, de théories et d'arguments ont été développées au sujet du rôle des dirigeants de sociétés cotées lors d'offres publiques d'achat hostiles. Le conflit d'intérêts dont les intéressés font face est évident: le risque notable de se voir remercier à la suite de l'acquisition, et de facto de perdre les avantages pécuniaires directement associés à leurs positions, les conduit le plus souvent à rejeter une offre, fut-elle favorable aux actionnaires. De ce débat éminemment important pour le droit des sociétés, deux écoles se distinguent. L'école « managériale », que les Etats-Unis ont pris comme modèle, se fait l'avocate d'un système dans lequel les dirigeants garderaient les pouvoirs de négocier et éventuellement de refuser une offre, ceci dans l'intérêt de leurs actionnaires. L'école actionnariale, au contraire, argue de la nocivité du conflit d'intérêt ainsi que des droits fondamentaux des actionnaires de pouvoir se prononcer sur le destin de la société, afin de leur conférer l'autorité décisionnelle. Ainsi se positionne la toute récente directive européenne sur les offres publiques d'achat. Reste la question cruciale dont la présente thèse s'attache à répondre: lequel de ces deux systèmes bénéficie au mieux les actionnaires ?