Mergers as Auctions

Marc Ivaldi and Jrissy Motis

No 6434, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Most empirical studies that evaluate motives and gains in M&A conclude that acquirers at best do not lose from the deal while targets obtain positive gains. With a database containing merging firms? characteristics and final bids, we propose a structural approach to infer acquirers? gains from merging by interpreting a merger as an auction. Using nonparametric methods, we estimate bidders? private values for targets and informational rents. We provide evidence of significant and positive merging gains. Moreover, investigating for the source of bidders? private valuation and informational rents, our empirical analysis supports the synergy hypothesis as a motive in horizontal mergers.

Keywords: Auctions; Corporate finance; Event studies; Merger (search for similar items in EconPapers)
JEL-codes: C14 G14 G34 L10 L20 (search for similar items in EconPapers)
Date: 2007-08
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Mergers as Auctions (2007)
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