Bustup Takeovers of Value-Destroying Diversified Firms

Philip G Berger and Eli Ofek

Journal of Finance, 1996, vol. 51, issue 4, 1175-1200

Abstract: The authors examine whether the value loss from diversification affects takeover and breakup probabilities. They estimate diversification's value effect by imputing stand-alone values for individual business segments and find that firms with greater value losses are more likely to be taken over. Moreover, those acquired firms whose losses are greatest are most likely to be bought by leveraged buyouts associations, which frequently break up their targets. For a subsample of large diversified targets, higher value losses increase the extent of posttakeover bustup and post-takeover bustup generally results in divested divisions being operated as part of a focused, stand-alone firm. Copyright 1996 by American Finance Association.

Date: 1996
References: Add references at CitEc
Citations: View citations in EconPapers (86)

Downloads: (external link)
http://links.jstor.org/sici?sici=0022-1082%2819960 ... O%3B2-Y&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

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:bla:jfinan:v:51:y:1996:i:4:p:1175-1200

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().