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Crossing takeover premiums and mix of payment: Empirical test of contractual setting in M&A transactions

Abstract : Analysis of the tender offer premiums and of the means of payment should not be done separately. In the empirical literature these two variables are often considered independently although they may have endogenous relation in a contractual setting. Using a sample of European M&As over the 2000-2010 decade, we show that these two variables are jointly set in a contractual empirical approach. The relationship between the percentage of cash and the offer premium is positive: higher premiums will yield payments with more cash. We highlight that the payment choice is not a continuum between full cash and full share payment. Two different regimes of payment in M&A transactions are empirically characterized. We analyze the major determinants of M&A terms when the offer premium and the means of payment are jointly set. The underlying rationale of asymmetry of information and risk sharing calculus is found significant in the setting of the agreement.
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https://halshs.archives-ouvertes.fr/halshs-00636614
Contributor : Hubert de la Bruslerie <>
Submitted on : Thursday, October 27, 2011 - 6:23:54 PM
Last modification on : Wednesday, September 23, 2020 - 4:28:24 AM
Long-term archiving on: : Monday, January 30, 2012 - 11:13:04 AM

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  • HAL Id : halshs-00636614, version 1

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Hubert de la Bruslerie. Crossing takeover premiums and mix of payment: Empirical test of contractual setting in M&A transactions. 18th Multinational Finance Society, Jun 2011, Roma, Italy. ⟨halshs-00636614⟩

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