Analysing mergers and acquisitions in European financial services: An application of real options

Christian Dunis and Til Klein

The European Journal of Finance, 2005, vol. 11, issue 4, 339-355

Abstract: This paper applies real option pricing theory to the analysis of a sample of 15 recent mergers and acquisitions in the European financial services industry. Overall, it is found that those acquisitions were not on average overpaid. Nevertheless, further analysis, assuming the option premium equalled the takeover premium, shows that either the implicitly assumed volatility was too low, the assumed time to maturity was very short and/or the assumed subsequent market performance was too optimistic.

Keywords: Banking system; event studies; mergers and acquisitions; real options (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (13)

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DOI: 10.1080/1351847032000137456

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