英语论文网

The Market for Corporate Control: activity levels, firm performance and arbitrage

Advanced Corporate Finance
Semester 1 2009

Terminology

Merger (Schemes of Arrangement)
Negotiated deals
Mutuality of negotiations
Mostly friendly
Tender offers (Takeovers)
Offer made directly to the shareholders
Hostile when offer made without approval of the board
Restructuring — changes to improve operations, policies, and strategies 

Types of Mergers
Horizontal mergers
Combination between firms in same business activity
Rationale includes
Economies of scale and scope
Impact of government regulation due to potential anticompetitive effects
Vertical mergers本论文由英语论文网www.51lunwen.org整理提供
Combinations between firms at different stages
Rationale includes information and transaction efficiency

Types of Mergers
Horizontal mergers
Combination between firms in same business activity
Rationale includes
Economies of scale and scope
Impact of government regulation due to potential anticompetitive effects
Vertical mergers
Combinations between firms at different stages
Rationale includes information and transaction efficiency
Conglomerate mergers
Combination of firms in unrelated types of business activity
Rationale includes diversification
Distinctions between conglomerate and nonconglomerate firms

Tender Offers
Bidder seeks target's shareholders approval
Impact of minority shareholders
Kinds of tender offers and provisions
Conditional vs. unconditional
Restricted vs. unrestricted
"Any-or-all" tender offer
Contested offers
Two-tier offers
Partial offers

Operating Synergies
Nature
Economies of scale
Economies of scope
Vertical integration economies
Organization capital and reputation
Managerial economies
Empirical evidence本论文由英语论文网www.51lunwen.org整理提供
Weak but why?

Diversification Motives
Nature
Enables firm-specific investments
Preservation of organization or reputational  capital
Increase corporate debt capacity
Decrease cash flow variability
Empirical evidence
Value destroying except for “strategic”

Financial Synergies
Nature
Complementarities matching the availability of investment opportunities and internal cash flows
Lower cost of internal financing
Increase in debt capacity
Economies of scale in financing
Empirical evidence
Little support本论文由英语论文网www.51lunwen.org整理提供

Free Rider Problem and M&A Activity
The problem
Small shareholders will not tender at any offer price below the higher expected price that should result from the merger
Possible solutions
Pivotal shareholder(s)
“Substantial” shareholder
Two-tier offer
Dilute nontendered shares