It is now a well-know fact that mergers and acquisitions activity comes in waves. The most recent wave, the 5th takeover wave of the 1990s, was characterized by an unprecedented number of corporate restructurings in terms of mergers and acquisitions (M&As), public-to-private transactions, spin-offs and divestitures, and leveraged recapitalizations. Following the collapse of the stock market in March 2000, M&A activity slumped dramatically, but this pause ended in the second half of 2004 when takeover deals occurred again quite frequently. Indeed, some observers wonder whether the 6th takeover wave has started. The takeover wave in the 1990s was particularly remarkable in terms of size and geographical dispersion. For the first time, Continental European firms were as eager to participate as their US and UK counterparts, and M&A activity in Europe hit levels similar to those experienced in the US. Due to its financial impact and the unprecedented activity in Continental Europe, the 5th takeover wave of the 1990s and recent takeover activity (in biotech, utilities, pharmaceuticals) have triggered a great deal of interesting academic research. This volume brings together a selection of insightful papers. An impressive group of international authors address the following themes: takeover regulation; the cyclical pattern of the M&A markets and probable causes and effects; methods to determine the performance of success of M&A actions; cross border deals; means of payment and its effects; studies of hostile bids; high leverage takeovers and delistings
Chapter 1 Understanding mergers and acquisitions Greg. N. Gregoriou and Luc Renneboog 1.1 Introduction 1.2 Historical Background 1.3 Recent M&A Activity 1.4 M&A Clustering: Theory 1.5 Empirical Evidence on M&A Profitability 1.6 Conclusion and overview of the research presented in this book Chapter 2 Cross-border mergers and acquisitions: the facts as a guide for international economics Steven Brakman, Harry Garretsen and Charles van Marrewijk 2.1 Introduction 2.2 Cross-border M&As: basic characteristics 2.3 Countries and M&As in 2005 2.4 Regional distribution of cross-border M&As 2.5 Countries and M&As over time 2.6 Inequality between cross-border M&As 2.7 Looking more closely at individual firms that engage in M&A 2.8 Conclusion Chapter 3 Searching for alpha: which acquisitions create value? Manolis Liodakis, and Che Pang 3.1 Introduction 3.2 Do takeovers create any value? 3.3 Motives for deals 3.4 Characteristics of value enhancing acquirers 3.5 Putting it all together 3.6 Conclusion Chapter 4 Long-term operating performance in European mergers and acquisitions Marina Martynova, Sjoerd Oosting and Luc Renneboog 4.1 Introduction 4.2 Prior research 4.3 Data and methodology 4.4 Changes in corporate performance caused by M&As: results 4.5 The determinants of the post-acquisition operating performance 4.6 Conclusion Chapter 5 Bondholder wealth effects in mergers and acquisitions Luc Renneboog and Peter G. Szilagyi 5.1 Introduction 5.2 The theory and empirics of bondholder wealth in M&As 5.3 Do cross-country differences in governance and legal standards matter? 5.4 Conclusion Chapter 6 Mix and match facilities and loan notes in acquisitions Marc Goergen and Jane Frecknall-Hughes 6.1 Introduction 6.2 Literature review 6.3 Data sources and sample selection 6.4 Characteristics of mix and match facilities 6.5 Loan notes 6.6 Accounting disclosure and treatment 6.7 Loan notes - tax choices 6.8 Conclusion Section 2 The impact of takeover regulation and corporate governance on M&A activity Chapter 7 The effect of merger laws on merger activity: International evidence Arturo Bris, Christos Cabolis, and Vanessa Janowski 7.1 Introduction 7.2 Related literature 7.3 Merger laws 7.4 Merger data 7.5 Domestic and cross-border mergers, and merger laws 7.6 Conclusion Chapter 8 The governance motive in cross-border mergers and acquisitions Stefano Rossi and Paolo Volpin 8.1 Introduction 8.2 A simple model of cross-border M&A activity 8.3 Empirical analysis 8.4 Conclusion Chapter 9 Corporate governance convergence through cross-border mergers: the case of Aventis Arturo Bris and Christos Cabolis 9.1 Introduction 9.2 Aventis: Characteristics and main results 9.3 The merging parties 9.4 The merger: the formation of Aventis 9.5 Corporate governance: Rhone Poulenc, Hoechst and the French and German corporate codes 9.6 Corporate governance of Aventis 9.7 Conclusion Chapter 10 Whither hostility? William Bratton 10.1 Introduction 10.2 Discipline as a motivation for mergers 10.3 The decline of the hostile takeover 10.4 The reappearance of hostility 10.5 Conclusion Chapter 11 Corporate governance and acquisitions: Acquirer wealth effects in the Netherlands Abe de Jong, Marieke van der Poel and Michiel Wolfswinkel 11.1 Introduction 11.2 Literature review 11.3 Research design 11.4 Results 11.5 Conclusion Chapter 12 EU takeover regulation and the one share one vote controversy Arman Khachaturyan and Joseph A. McCahery 12.1 Introduction 12.2 Shareholder democracy 12.3 Economics of ownership and corporate voting: a brief overview 12.4 Is one share one vote optimal? 12.5 Conclusion and policy imlications Chapter 13 Opportunities in the M&A aftermarket: squeezing out and selling out Christoph Van der Elst and Lientje Van den Steen 13.1 Introduction 13.2 Rationale for the squeeze-out right and the sell-out right 13.3 Squeeze-out right and the protection of private property 13.4 The squeeze-out right and the sell-out right in a comparative legal perspective 13.5 Conclusion Section 3 Special types of mergers and acquisitions Chapter 14 Mergers and acquisitions in IPO markets: evidence from Germany David B. Audretsch and Erik E. Lehmann 14.1 Introduction 14.2 Predicting takeover targets: a short review of the literature 14.3 Data and the sample 14.4 Empirical results 14.5 Conclusion Chapter 15 Reverse mergers in the UK: listed targets and private acquirers Peter Roosenboom and Willem Schramade 15.1 Introduction 15.2 Reverse merger mechanics 15.3 Hypotheses 15.4 Data and methodology 15.5 Empirical results 15.6 Conclusion Chapter 16 Efficiency and merger activity in the insurance industry Fabio Bertoni, Annalisa Croce and Greg N. Gregoriou 16.1 Introduction 16.2 Related Literature 16.3 Research Hypotheses 16.4 Sample and descriptive statistics 16.5 Methodology 16.6 Results 16.7 Conclusion Chapter 17 The profile of venture capital exits in Canada Douglas Cumming and Sofia Johan 17.1 Introduction 17.2 Venture capital exits: theory and prior evidence 17.3 Venture capital in Canada 17.4 The data: exited Canadian venture capital investment, 1991-2004 17.5 Conclusion Section 4 Irrationality in takeover decision making Chapter 18 Executive compensation and managerial overconfidence: Impact on risk taking and shareholder value in corporate acquisitions Sudi Sudarsanam and Jian Huang 18.1 Introduction 18.2 Alignment of shareholder and managerial interests 18.3 Managers? behavioural biases and risk taking 18.4 Joint impact of exec compensation and overconfidence 18.5 Joint impact of executive compensation, overconfidence and governance on corporate acquisitions 18.6 Review of recent empirical studies based on the integrated framework 18.7 Unresolved theoretical and empirical issues 18.8 Conclusion Chapter 19 Opportunistic accounting practices around stock financed mergers in Spain Maria J. Pastor-Llorca and Francisco Poveda-Fuente 19.1 Introduction 19.2 Sample and data 19.3 Measuring earnings management 19.4 Accruals pattern around the time of the merger 19.5 Earnings management and post-merger stock price performance 19.6 Conclusion Chapter 20 Mergers between energy firms in Europe: champions and markets Francesc Trillas 20.1 Introduction 20.2 The issues at stake 20.3 The behavior of target firms 20.4 Expanding firms 20.5 Competition policy and national champions 20.6 Conclusion Section 5 Valuation of takeovers Chapter 21 Valuation methods and German merger practice Wolfgang Breuer, Martin Jonas, Klaus Mark 21.1 Introduction 21.2 The background of merger processes in Germany 21.3 Basic valuation principles in Germany 21.4 The German Tax CAPM - a Tax CAPM with German income tax 21.5 A valuation example: Merger valuation of Deutsche Telekom 21.6 Consequences for German takeover practice 21.7 Conclusion Chapter 22 The impact of cross border mergers and acquisitions on financial analysts? forecasts: evidence from the Canadian stock market Alain Coen, Aurelie Desfleurs and Claude Francoeur 22.1 Introduction 22.2 Conceptual framework 22.3 Measures of financial analysts? forecast errors and data 22.4 Empirical results and analysis 22.5 Conclusion Chapter 23 Size does matter - firm size and the gains from acquisitions on the Dutch market Roman Kraussl and Michel Topper 23.1 Introduction 23.2 Empirical analysis 23.3 Discussion of results 23.4 Conclusion Chapter 24 Share buy-backs, institutional investors and corporate control Paul U. Ali 24.1 Introduction 24.2 Buy-back mechanisms 24.3 Myth and reality of buy-backs 24.4 Conclusion
