Activist arbitrage in M&A acquirers

Wei Jiang, Tao Li and Danqing Mei

Finance Research Letters, 2019, vol. 29, issue C, 156-161

Abstract: A relatively understudied activist investor strategy is to purchase shares in the acquirer after an M&A announcement and exercise shareholder rights to change deal terms, or even to block the deal, through public campaigns. We provide new evidence on how the strategy affects target firms and activists’ returns. Activists tend to target deals involving defense mechanisms, and smaller acquirers with a history of low returns on invested capital. By blocking some deals and pushing other acquirers to lower their bids, such an “activist arbitrage” strategy yields significant returns and serves as a governance antidote to value-destroying acquisitions.

Keywords: Activist arbitrage; M&A acquirers; Governance (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612318302034
Full text for ScienceDirect subscribers only

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:eee:finlet:v:29:y:2019:i:c:p:156-161

DOI: 10.1016/j.frl.2018.07.003

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().