How Does Takeover Competition Affect the Stock Performance of Targets and Acquirers? Evidence from the European Union

Kellner Tobias and Maltritz Dominik ()
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Kellner Tobias: Staatswissenschaftliche Fakulät, Universität Erfurt, Nordhäuser Strasse 63, 99089 Erfurt, Freistaat Thüringen, Germany
Maltritz Dominik: Staatswissenschaftliche Fakulät, Universität Erfurt, Nordhäuser Strasse 63, 99089 Erfurt, Freistaat Thüringen, Germany

Review of Economics, 2023, vol. 74, issue 2, 161-193

Abstract: We examine the impact of M&A announcements on stock prices of targets and acquirers in the European Union from 2002 to 2021. In line with the literature, we find strong positive returns for the target firms’ stocks, whereas returns are low or insignificant for the acquirers. We contribute to the literature by focusing on the effect of takeover competition and distinguishing between the returns of first and later bids. Accordingly, we confirm strong relationships between subsequent offers and target firms’ stock returns. These returns increase if a second order is made and if the premium related to the second offer is higher.

Keywords: event study; mergers and acquisitions; multiple bids; stock returns; takeover competition; target firm (search for similar items in EconPapers)
JEL-codes: G14 G34 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1515/roe-2023-0058

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