M&A Toeholds in Europe

Abstract

This work focuses on toehold bidding in the European market, providing a comparison base with American studies. I carried out event studies to quantify Cumulative Abnormal Returns (CARs) as a representative measure of shareholder’s wealth in M&A transactions where a toehold is present. The headline statistically significant result of -1.28% in an [-2; +2] event window for core European countries falls short of what is expected when compared with American studies. This result is in line with the general idea of contradictory results often found in this field as stated in (Malatesta 1983). It agrees as well with the review of Haleblian et al. (2009) and with Franks and Harris (1989). It does not agree with Eckbo and Thorburn (2000), Carroll and Griffith (2010), Le and Schultz (2007) and Farinha and Miranda (2003). To control for other factors and characteristics of these events, I ran a cross sectional analysis while finding stock as method of payment and revenues of target as statistically significant moderators of shareholder’s wealth effects.

Date of Award	30 Aug 2012
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Øyvind Norli (Supervisor)