Excess premium offers and bidder success in European takeovers

Wolfgang Bessler () and Colin Schneck

Eurasian Economic Review, 2015, vol. 5, issue 1, 23-62

Abstract: For European takeovers, we study whether offering an “excess” premium has any effect on deal completion. We define “excess” premium as being higher than the “expected” premium derived from recent deals with comparable characteristics, controlling for industry, country, size, period, and other deal, bidder and target characteristics. We identify factors explaining why firms offer “excess” premiums and examine whether “excess” premiums increase the likelihood of deal completion. Our results suggest that merger and acquisition targets experience higher announcement returns in “excess” premium offers and successful bidders have a superior long-run performance regardless of paying an “excess” premium, whereas unsuccessful bidders’ performance is negative. The probability of offering an “excess” premium increases with bidder size but decreases with target size and depends on deal characteristics. Notably, deal completion is more likely when offering an “excess” premium. Copyright Eurasia Business and Economics Society 2015

Keywords: Mergers and acquisitions; Excess takeover premium; Deal completion; Bidder competition; Event study; Long-run performance; G34; G41 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1007/s40822-015-0017-6 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:eurase:v:5:y:2015:i:1:p:23-62

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40822

DOI: 10.1007/s40822-015-0017-6

Access Statistics for this article

Eurasian Economic Review is currently edited by Dorothea Schäfer

More articles in Eurasian Economic Review from Springer, Eurasia Business and Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().