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Ch07_09_combo_present_Cho_Final

S 190 target company valued over 1 billion billion

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Unformatted text preview: ls •1999: $3.3 trillion •1998: $2.4 trillion –190 deals involving a U.S. 190 target company valued over $1 billion billion –(SDC/Economist data) Global M&A activity ($US trillion) 4 3.5 3 2.5 2 1.5 1 0.5 0 90 91 92 93 94 95 96 97 98 99 000 001 002 003 004 005 006 19 2222222 Source: Thomson Financial 1–4 Mergers & Acquisitions­Outcomes Mergers & Acquisitions­Outcomes • Shareholders of acquiring firms – Close to zero – 2/3 stock price falls immediately after the announcement – Average 30% acquisition premiums Average • Shareholders of acquired firms – Above average returns – Pure cash transfer from shareholders of acquiring firms to Pure those of acquired firms those 1–5 Definitions Definitions • • • • • Mergers Acquisitions Takeovers Restructuring Strategic Alliances 1–6 Mergers, Acquisitions, and Takeovers • Merger – Two firms agree to integrate their operations on a Two relatively co-equal basis. E.g. HP-Compaq E.g. – Few true mergers actually occur, because one party is Few usually dominant in regard to market share or firm size. usually • Acquisition – On...
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