MA 2011 class 2 Event Study

MA 2011 class 2 Event Study - Mergers & Acquisitions 2011...

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Mergers & Acquisitions 2011 1 Prof. David Ravenscraft Kenan-Flagler Business School University of North Carolina Session 2: Evaluating acquisitions through the stock market reaction
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2 Analyzing Stock Market Reaction Useful anytime you have an event that is at least partially a surprise to the market M&A announcements tend to have an element of surprise Agenda Intuition behind stock market event studies Specific application to BASF’s hostile acquisition of Engelhard Strengths and weaknesses of approach Gary Parr’s flight’s cancelled. No talk tomorrow.
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3 Using stock market event studies to evaluate M&A activity Questions for BASF hostile takeover of Engelhard 1. Does this deal seem to make sense? 2. Why did BASF make a hostile takeover? What can Engelhard do to defend itself? 3. Did BASF offer too much for Engelhard or too little? Are they likely to have started a bidding war? 4. How do you think the stock market reacted to this acquisition and why? Is this acquisition a win- win deal for BASF and Engelhard shareholders or did BASF overpay or does the deal destroy value?
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4 What does the stock market think of this deal?
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This note was uploaded on 02/13/2012 for the course BUSI 599 taught by Professor Ravenscraft during the Fall '10 term at UNC.

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MA 2011 class 2 Event Study - Mergers & Acquisitions 2011...

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