The long-term success of M&;A in the automotive supply industry: determinants of capital market performance |
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Authors: | Jan-Peer Laabs Dirk Schiereck |
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Institution: | 1.European Business School,Oestrich-Winkel,Germany;2.Unternehmensfinanzierung/Corporate Finance,Technische Universit?t Darmstadt,Darmstadt,Germany |
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Abstract: | In the recent past, the automotive supply industry has been facing increasing merger activity. This paper examines the short-
and long-term wealth effects of horizontal mergers and acquisitions on acquirers in the automotive supply industry. Based
on a sample of 230 takeover announcements between 1981 and 2007, significant positive announcement returns to acquiring companies
were determined. While these positive short-term returns to acquirers represent an outstanding attribute of this industry
in terms of perceived synergy potential, this study also finds that acquirers are unable to sustain this exceptional position
beyond a short-term horizon. A combination of the Fama-French-3-Factor model in calendar time and the control firm approach
in event time consistently reveals significant value destruction of about 20% over 3years. In addition, the study determines
a significant impact of internationalization, transaction volume, product diversification, and acquirer’s bidding experience
on the long-term post-acquisition performance. |
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