An Analysis of Gains and Losses to Shareholders of Foreign Bidding Companies Engaged in Cross-Border Acquisitions Into the United Kingdom - 1986-1991

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Abstract

In this paper, the gains and losses to shareholders of 71 foreign companies which made takeover bids for companies listed in the United Kingdom during the 1986-1991 period are analysed.

The average abnormal return during the month of the bid announcement was positive, although not statistically significant. However, both prior to and subsequent to the bid announcement month, the overseas bidders earned highly significant negative abnormal returns. The cumulative abnormal returns over the five month period following the bid announcement were 4.77% with the index model and 9.79% with the market model.

Further analysis established that Continental European companies performed significantly worse than American bidders. In addition, large companies and companies bidding for large targets, performed significantly better than the other bidders.
Original languageEnglish
Pages (from-to)279-309
Number of pages31
JournalEuropean Journal of Finance
Volume1
Issue number3
DOIs
Publication statusPublished - 1995

Keywords

  • Cross-border
  • Acquisitions
  • Takeovers
  • Bidders

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