The influence of merger and acquisition deal hostility on the announcement effect of shareholder wealth for European listed targets

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The influence of merger and acquisition deal hostility on the announcement

effect of shareholder wealth for European listed targets

Economics and Finance

Coordinator: Mr. Ligterink

Maarten Jan Belt

10650482

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This document is written by Maarten Jan Belt who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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1. Introduction

Most investments are relatively small to the size of a company, however mergers and acquisitions (M&As) are major, externally observable, and discretionary long-term investments (Datta, Iskandar-Datta & Raman, 2001). The market of mergers and acquisitions, defined as the purchase of one company (called the target) by another company (called the acquirer or the bidder), has grown remarkable. Prices paid for target firms in the USA and Europe doubled in 1993 compared to previous years. in 1996, total value of US and European mergers and acquisitions rose to 1117 million dollar. In 1999 the European merger and acquisition market was almost as large as the merger and acquisition market of the United States. Twelve percent of the total value of the

European M&A market was generated by deals in excess of 100 million dollar. During the same year, the number of hostile mergers and acquisitions in Europe rose with 369 hostile bids compared to only fourteen in 1996, seven in 1997 and 5 in 1998 (Goergen & Renneboog, 2004).

Economic analysis has identified two broad classes of mergers and acquisitions, the first is what we call hostile takeovers; the second class can be called friendly takeovers. We view an M&A hostile when the initial bid for the target firm was neither negotiated with the board of the target firm prior to being made nor accepted by the management of the target firm as made. However, the bidding firm does not have to be the eventual acquirer. Initial rejection by the target's management is viewed as evidence of the acquirer's hostility (Morck, Shleifer & Vishny, 1988).

A friendly takeover is a merger or acquisition which is approved by the management of the target firm. Before an offer is made for another company, the bidder usually informs the target company's board of directors. If the board suggests that accepting the offer serves the shareholders in a better way than rejecting the bid, it recommends the offer to be accepted by the shareholders. Acquirers of this type use early negotiations to develop an environment where both sides are working together in good faith to arrive at a mutually advantageous transaction. Bidders are flexible and respectful in their negotiations, and they try to help target managers to see the career

opportunities that could result after the merger or acquisition (Aiello & Watkins, 2000). Loughran and Vijh (1997) argued that the abnormal returns of target firms in hostile takeovers are expected to differ from those of friendly target firms. Hostile bids may create additional value as new managers are appointed. In the case of friendly takeovers, the additional value creation is less likely to occur since firms enjoy the cooperation of incumbent managers. In contrast, Healy, Palepu and Ruback (1992) did not find any evidence to suspect that there are merger- and acquisition-related abnormal stock return differences between hostile and friendly takeovers.

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In this paper, I investigated the wealth effects of European listed target firms in mergers and acquisitions that took place in Europe. As most of the M&A research concentrated on the United States, I believed that a study on European M&As will yield interesting results. I distinguished between the wealth effects of hostile M&As and friendly mergers and acquisitions within Europe. The paper is organized as follows. Section 2 reviews the literature and the main findings from previous studies on mergers and acquisitions. Section 3 describes the sample of mergers and acquisitions used in this paper and the methodology. Section 4 shows the results and the main findings. Section 5 provides a conclusion.

2. Literature review

The literature on mergers and acquisitions is unanimous: target shareholders benefit from mergers and acquisitions, as evidenced by the large premiums they receive for selling their shares relative to the pre-announcement share price (Healy et al., 1992). For instance, Jarrell and Poulsen (1989) examined the shareholder wealth effects in tender offers of 526 US exchange-listed target firms from 1963 till 1986. They found that target firms received on average a premium of 28.99 percent, measured from twenty days before to ten days after the bid. In line with the previous study, Kaplan and Weisbach (1992) gathered a sample of 271 successful US acquisitions during the period 1971 till 1987 and found that target shareholders earn a positive cumulative abnormal return of 26.90 percent, measured from five trading days before the day of initial announcement of the acquisition until five trading days after the final bid.

However, in contrast, there is little consensus about the announcement wealth effects for bidding companies. About half of the studies report small negative returns for the acquiring firms, whereas the other half finds zero or small positive abnormal returns for bidding firms (Goergen & Renneboog, 2004). Allen and Sirmans (1987) investigated the acquiring firm’s stock price reaction to takeover proposals when both buyer and seller are real estate investment trusts (REITs). They derived a sample of 38 US successful mergers drawn from Moody’s Bank and Finance Manual over the time-period ranging from 1977 till 1983. They found a small, but statistically significant two-day wealth increase of 5.78 percent for acquiring REITs.

Moeller, Schlingemann and Stulz (2005) found a different conclusion. They found that merger and acquisition announcements in the 1990s are profitable in the aggregate for bidding-firm shareholders until 1997. The following years, they found that acquiring firm shareholders lost 12 cents at the announcement of acquisitions for every dollar spent on acquisitions for a total loss of 240 billion dollar ranging from 1998 through 2001. The loss of acquiring-firm shareholders was so

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large due to a small number of acquisitions with negative synergy gains by firms with extremely high valuations.

Research on hostile and friendly M&A activity is largely confined to the UK and USA. Higson and Elliot (1998) gathered a sample of 830 takeovers comprises all successful bids involving UK-listed companies during the period 1975 to 1990. Around 15 percent of their sample consisted of hostile mergers and acquisitions. They found that the hostile target firms showed positive announcement period abnormal returns of 42.7 percent against 36.6 percent for friendly target firms.

Servaes (1991) collected a sample of 704 US complete takeovers from 1972 till 1987 and found that target shareholders earn a positive announcement period cumulative abnormal return of 23.64 percent. Similar to Higson and Elliot, he found that hostile target firms showed announcement period abnormal returns of 31.77 percent whereas friendly targets showed abnormal returns of 21.89 percent. In other words, target firms gained almost ten percent more when the takeover was hostile.

The M&A literature has discovered a variety of drivers influencing announcement period abnormal returns. Similar to domestic acquisitions, shareholders of US target firms can pocket large positive abnormal returns in cross border bids. (Goergen & Renneboog, 2004). Harris and Ravenscraft (1991) collected a sample of 1273 US targets, where about 12.5 percent were foreign acquisitions. They found that wealth gains are significantly higher in cross border takeovers, 39.77 percent, than in domestic takeovers, 26.33 percent. Similar, Cebenoyan, Papaioannou and Travlos (1992) used two samples consisting of 134 US targets acquired by domestic firms and 73 US targets acquired by foreign firms from 1978 till 1987 and concluded that foreign takeovers indeed produced higher wealth gains for target shareholders than domestic takeovers.

However, Danbolt (2002) finds no statistical difference between short-run abnormal returns for UK targets between domestic mergers and acquisitions and cross border activity; during the month of the takeover announcement, large and highly significant abnormal returns accrued to shareholders in both domestic and cross border target firms, amounting to 20.29 percent for targets in domestic takeovers and 21.05 percent for UK target firms acquired by foreign firms. This resulted in a small cross border effect during the month of the announcement of 0.76 percent which was not statistically significant.

Another driver is the manner of payment, how the merger or acquisition is financed. Eckbo and Thorburn (2000) investigated a sample of 416 acquisitions, divided into 90 cash bids, 268 stock bids and 58 bids where a mix of cash and stock was used. On average, cash offers led to a

significantly increase of 3.11 percent in the bidder's wealth over the event month. Stock offers had a statistically significant average abnormal return of 2.99 percent. Moreover, the average bidder presenting a mixed offer gains a highly significant 5.10 percent abnormal return over the

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announcement month. Goergen and Renneboog (2004) found strong evidence that the share price reaction for the target is sensitive to the means of payment for its shares. The sample consisted of 88 cash bids, 20 equity bids and 18 combined bids. Cash offers triggered substantially higher abnormal returns, 10 percent at the announcement bid, than offers including equity, 6.7 percent and combined offers of cash and equity, 5.6 percent. In addition, they found that the announcement effect for domestic and cross-border targets amounts to 10.2 percent and 11.3 percent, whereas the difference is not statistically significant.

In this paper, I investigate the cumulative abnormal returns for European hostile and friendly mergers and acquisitions. I also analyze whether there is a difference in premium paid for targets firms between cross border M&As and domestic M&As. Furthermore, I look at the possible impact of different manners of payment. I made a distinction between cash bids, stock bids, bids combining a mix of cash and stock, and the fact that the manner of payment is unknown. Finally, I examine whether the year of the announcement of the takeover has an effect on the target firm shareholders’ wealth.

3. Data and methodology

3.1 Sample selection and data sources

Data on European mergers and acquisitions were collected from the financial database ThomsonOne. The M&A module in ThomsonOne contains information about over 400.000

worldwide deals since 1977. Both the target firm and the bidder firm must be located in Europe. In addition, the takeover must be successful and must took place between 2000 and 2016. First, I searched for hostile deals. Via the advanced search toolbar a custom report was added to provide me from the characteristics of the deals. The report provided the names of the firms involved in the merger or acquisition, the target Datastream code, the form of the deal (merger or acquisition), the means of payment in the takeover (cash, stock, mixed or unknown), whether the M&A took place domestically or cross border and the announcement date of the takeover.

Above criteria gave 56 hits. However, some of these 56 hostile hits did not have a target Datastream code and thus financial information about these targets is not available in Datastream. Via Datastream I could find the financial background of the targets, historical (adjusted) stock prices as well as other financial statement data. Datasteam makes is possible to examine relationships between assets and relative performance. After filtering on the Datastream target code a sample of 39 hostile deals remained (see appendix). Secondly, I searched for friendly deals. The same criteria gave 151.380 hits. Of these 151.380 hits, I selected 39 friendly M&As matching the announcement

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Table 1

Sample composition

This table shows the composition of the sample used in this paper. It distinguishes between deal attitude (hostile and friendly), manner of payment (cash, mixed, stock and unknown), whether the M&A took place domestically (domestic) or cross border (international) and the year of announcement.

Year M&A announced 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total

Number of M&As 7 11 19 4 2 5 6 3 6 3 7 3 2 78 Deal attitude Hostile 3 5 9 2 1 3 3 2 3 2 3 2 1 39 Friendly 4 6 10 2 1 2 3 1 3 1 4 1 1 39 Manner of payment Cash 4 7 15 1 0 2 3 2 4 2 4 2 1 47 Mixed 2 3 1 0 1 2 0 1 0 0 0 0 0 10 Stock 1 0 1 0 0 0 1 0 0 0 1 0 0 4 Unknown 0 1 2 3 1 1 2 0 2 1 2 1 1 17 Cross-border International 2 3 4 1 0 4 1 3 3 1 1 1 1 25 Domestic 5 8 15 3 2 1 5 0 3 2 6 2 1 53

dates, where possible also the form, of the sample with hostile deals. However, some deviations in date and form can be found (see appendix).

Table 1 summarizes the bid characteristics of my sample. From table 1 you can find that my sample is divided into 47 cash bids, 10 bids consisting of a mix of cash and stock, 4 stock bids and 17 bids where the manner of payment is unknown. Besides, a distinction is made between 25 cross border (international) M&As and 53 domestic M&As. Furthermore, the M&As are categorized by year of announcement.

3.2 Methodology

In this paper, I am going to use an event study in order to determine the cumulative abnormal returns for European listed targets around the announcement date. The initial task of conducting an event study is to define the event of interest, the announcement date, and identify the period over which the abnormal returns of the targeted firms involved in this event will be examined, the event window (MacKinlay, 1997). In this paper I used the event windows [-1, 1] and [-10, 10].

In this paper, I used a sample of 78 deals, 39 hostile deals and 39 friendly deals. With the help of the target Datastream codes of the target firms I could find the financial data in Datastream to determine the abnormal returns. The abnormal return is the actual ex post return of the security over the event window minus the normal return of the firm over the event window. The normal return is defined as the expected return without conditioning on the event taking place. The abnormal returns are calculated using the difference between the actual returns and the expected returns of the firms (Shah & Arora, 2014).

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Abnormal return (ARi,t) = Ri,t – E[Ri,t]

Where Ri,t is the realized return for firm i at time t,

and E[Ri,t] is the expected return for firm i at time t.

Different methods can be used to determine E[Ri,t]. The constant mean return model (mean

adjusted), where E[Ri,t] is a constant through time; the market model, where a stable linear relation

between the market return and the security return is assumed; furthermore, you can use the Capital Asset Pricing Model or a constant mean return model (market adjusted) (Shah & Arora, 2014). In this paper, the constant mean return model (mean adjusted) and the market model are used to

determine E[Ri,t].

Constant mean return model (mean adjusted): E[Ri,t] = 1/N Σ Ri,t (for t = -300 to t = -100)

Given the selection of a normal performance model, the estimation window needs to be defined. The most common choice is using the period prior to the event window (MacKinlay, 1997). I used an estimation window of t = -300, meaning 300 trading days before the announcement, to t = -100, meaning 100 trading days before the announcement. Although the constant mean return model is perhaps the simplest model, it often yields results similar to those of more sophisticated models. This lack of sensitivity to the model can be attributed to the fact that the variance of the abnormal return is frequently not reduced much by choosing a more sophisticated model (MacKinlay, 1997).

Market model:

E[Ri,t] = b0 + b1 x E[RM] or E[Ri,t] = αi + βi[RMt].

The values for b0/αi and b1/ βi can be estimated via ordinary least squares (OLS), a consistent

estimation procedure. Again, an estimation window from t = -300 to t = -100 is used, assuming that the estimation window is nog affected by the announcement date. Once we have the values of b0/αi

and b1/ βi we can find E[Ri,t], for the specific days in the event window around the announcement

date, by filling in the market returns. The market model often represents an improvement over the constant mean return model. By removing the portion of the return that is related to variation in the market’s return, the variance of the abnormal return is reduced (MacKinlay, 1997).

To determine [RMt], the market index STOXX Europe 600 is used as benchmark. the STOXX

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of the European region. Hereunder, the index STOXX Europe 600 can be recognized by its Datastream code DJSTOXX.

Based on the assumption that asset returns are jointly multivariate normal and

independently and identically distributed through time, the constant mean return model and the market model can be used in this paper to determine abnormal returns. (MacKinlay, 1997).

From here, to find the abnormal returns for each company a special tool is used; the Datastream Event Study Tool. It enables you to do an event study based on data from Datastream with the help of the target Datastream codes. It calculates the mean adjusted abnormal returns and the market model adjusted abnormal returns for each day in the event window.

The abnormal return observations must be aggregated in order to draw overall inferences for the event of interest. Here, the concept of cumulative abnormal return (CAR) comes into play; necessary to accommodate a multiple period event window. I calculated the mean adjusted and market adjusted cumulative abnormal return (CAR) for each firm myself; summing up the adjusted returns in the event window (see appendix).

CARi = 1/N Σ ARi,t

Based on these findings, with the help of t-Test analyses I can test whether the

announcement period cumulative abnormal return for a European target firm is significant different from zero; in other words, investigating the wealth effects of European listed targeted firms in mergers and acquisitions that took place in Europe. In a t-Test, the test variable is compared against a test value, which is a known or hypothesized value of the mean in the population, in order to check the validity of the null hypothesis. Besides, via regression analyses in the program SPSS, I can test whether specific drivers are significant related to the value creation or destruction of a European target firm.

4. Results

4.1. Target shareholder wealth effects in the event window [-1, 1]

In this section I focused on univariate analyses of the bid premiums in the event window [1, 1]. I related the cumulative abnormal returns to one specific driver at a time. In addition, in section 4.1.6., I estimated the impact for all the explanatory factors simultaneously.

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Table 2

Cumulative abnormal returns for European target firms.

This table shows cumulative abnormal returns measured over the event window [-1, 1] for European listed target firms based on the constant mean return model (MeanAdj) and the market model (MarketAdj).

t-Test: unequal variances CAR (MeanAdj) CAR (MarketAdj)

Average CAR 0.116273591 0.118599088

Variance 0.033333434 0.033148576

Observations 78 78

Hypothesized mean difference 0 0

Df 77 77 t-Statistic 5.624557468a 5.753024334a p-value 0.0014342 0.00844808 a Significant at 1% level b Significant at 5% level c Significant at 10% level 4.1.1. Target firms

From table 2 you will find the average values of the cumulative abnormal returns based on the constant mean return model and the market model after I used the Datastream Event Study Tool to determine the abnormal returns. Table 2 shows that the announcement of a takeover bid caused substantial positive cumulative abnormal returns for the shareholders of European targets. For the event window [-1, 1], cumulative abnormal returns of 11.63 percent were realized based on the constant mean return model and cumulative abnormal returns of 11.86 percent based on the market model. Both values, with t-statistic values of 5,62 and 5,75, are significant at the 1 percent level. These positive cumulative abnormal returns are in line with the findings of Healy, Palepu and Ruback (1992), Jarrell and Poulsen (1989) and Kaplan and Weisbach (1992). In the next section, I related the cumulative abnormal returns to the characteristic hostile.

4.1.2. Hostile versus friendly bids

Here I analyzed the market reactions to the deal attitude of the M&As. A distinction was made between 39 hostile deals and 39 friendly deals. From table 3 panel A, you can see a strong positive announcement effects for hostile M&As as well as for friendly mergers and acquisitions. Based on the constant mean return model, I found, on average, that hostile target firms showed announcement period cumulative abnormal returns of 16.80 percent whereas friendly targets showed cumulative abnormal returns of 6.40 percent. Based on the market model, I found that hostile target firms showed announcement period cumulative abnormal returns of 16.80 percent whereas friendly targets showed cumulative abnormal returns of 6.80 percent.

Based on the constant mean return model, from table 3 panel A, the coefficient of hostile (B = 0.104) indicates that hostile has quite an influence on the values of the cumulative abnormal returns. The t-statistic of 2.611 is significant at the 5 percent level, indicating that the factor hostile caused a 10.4 percent higher positive effect on European target firm shareholders’ wealth than

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Table 3

Univariate regression results for European target firms by different characteristics

This table shows the univariate regression results measured over the event window [-1, 1] for European listed target firms by different characteristics based on the constant mean return model (MeanAdj) and the market model (MarketAdj). Panel A shows the influence of deal attitude (hostile and friendly) on the cumulative abnormal return. Panel B shows the relation between the cumulative abnormal return and whether the M&A took place domestically or cross border (international). Panel C shows the influence of manner of payment (cash, mixed, stock or unknown) on the cumulative abnormal return (standard errors between parentheses).

Univariate regressions CAR (MeanAdj) CAR (MarketAdj)

Independent variable Coefficient (B) t-Statistic Coefficient (B) t-Statistic

Panel A: Deal attitude

Constant 0.064 2.278b 0.068 2.425b

(0.028) (0.028)

Hostile takeover (dummy) 0.104 2.611b 0.100 2.520b

(0.040) (0.040)

Panel B: Cross border

Constant 0.105 4.181a 0.108 4.288a

(0.025) (0.025)

International (dummy) 0.035 0.784 0.035 0.781

(0.044) (0.044)

Panel C: Manner of payment

Constant 0.069 1.556 0.074 1.680c

(0.044) (0.044)

Payment in cash (dummy) 0.069 1.325 0.063 1.214

(0.052) (0.052)

Mixed payment (dummy) 0.062 0.853 0.065 0.895

(0.073) (0.073)

Payment in stock (dummy) -0.040 -0.389 -0.040 -0.390

(0.102) (0.102) a Significant at 1% level b Significant at 5% level c Significant at 10% level

domestic M&As. Similar, based on the market model, the coefficient of hostile (B = 0.100) from table 3 panel A indicates that hostile has quite an influence on the value of the cumulative abnormal returns. The t-statistic of 2.520 is significant at the 5 percent level, indicating that the factor hostile caused a 10 percent higher positive effect on target firm shareholders’ wealth than domestic M&As.

4.1.3 Domestic versus cross border M&As

My sample is divided into 25 cross border M&As and 53 domestic deals (table 1). Based on the constant mean return model, Table 3 panel B shows that the coefficient of international (B = 0.035) has a minor influence on the value of the cumulative abnormal return. In addition, the insignificance of the variable international (t = 0.784) suggests that the wealth gains of European target firms are not influenced by the fact whether the M&A took place domestically or cross border. Similar, based on the market model, table 3 panel B shows that the coefficient of international (B = 0.035) has a minor influence on the value of the CAR. The insignificance of the variable international (t = 0.781)

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Table 3 continued

Univariate regression results for European target firms by different characteristics

This table shows univariate regression results measured over the event window [-1, 1] for European listed target firms by different characteristics based on the constant mean return model (MeanAdj) and the market model (MarketAdj). Panel D shows the influence of the year of announcement on the cumulative abnormal return (standard errors between

parentheses).

Panel D: Year of announcement

Constant 0.126 1.745c 0.125 1.742c

(0.072) (0.072)

Announcement year 2001 (dummy) -0.024 -0.264 -0.015 -0.165

(0.092) (0.092)

Announcement year 2002 (dummy) 0.026 0.312 0.026 0.310

(0.084) (0.084)

(0.120) (0.119)

(0.153) (0.153) (0.509)

(0.112) (0.111)

(0.106) (0.106)

(0.132) (0.131)

(0.106) (0.106)

(0.132) (0.131)

(0.102) (0.102)

(0.132) (0.131)

suggest that the wealth gains of European target firms are not influenced by the fact whether the merger or acquisition took place domestically or cross border.

4.1.4. Mean of payment in takeover bids

My sample is divided into 47 cash bids, 10 bids consisting of a mix of cash and stock, 4 stock bids and 17 bids where the manner of payment is unknown. Table 3 panel C, based on the constant mean return model, the coefficients of cash (B = 0.069), mixed (B = 0.062) and stock (B = -0.040) indicate that cash, mixed and stock have a minor influence on the value of the cumulative abnormal

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return. None of the variables cash (t = 1.325), mixed (t = 0.853) or stock (t = -0.389) is significant, indicating that the manner of payment is not related to the value of CAR. Similar, based on the market model, table 3 panel C shows that the coefficients of cash (B = 0.063), mixed (B = 0.065) and stock(B = -0.040) have a minor influence on the value of CAR. The insignificance of the variables cash (t = 1.214), mixed (t = 0.895) and stock (t = -0.390) suggest that the wealth gains of European target firms are not influenced the manner of payment.

4.1.5. Deals sorted by announcement year

Table 1 shows that the 78 takeovers in my sample are classified by their announcement year, ranging from the years 2000 to 2012. Table 3 panel D provides the coefficients of the independent variables based on the constant mean return model. The table shows that the coefficients are all very small, meaning a minor influence on the value of the cumulative abnormal return. The t-values of all the independent variables are insignificant, indicating that time is not related to the value of

cumulative abnormal return. Moreover, the table shows that the coefficients of the independent time variables based on the market model are all very small as well. Again, none of the values is significant meaning that the year of the announcement of the takeover is not related to the value of CAR.

4.1.6. Determinants of shareholder wealth effects for European targets

I regressed the cumulative abnormal returns of the European target firms over the event window [-1, 1] on variables capturing:

(i) the deal attitude (friendly or hostile);

(ii) whether the M&A took place domestically or cross border;

(iii) the means of payment (cash, a mix of cash and stock, stock or unknown); (iv) the year of announcement of the M&A

Table 4, based on the constant mean return model, shows a positive announcement effect for hostile M&As. The coefficient of hostile (B = 0.097) with t = 2.232 is significant at the 5 percent level,

indicating that the factor hostile caused a 9.7 percent higher positive effect on European target firm shareholders’ wealth than friendly M&As, on average. The insignificance of the other variables suggest that the wealth gains of European listed target firms are not influenced by the manner of payment, the fact whether the M&A took place domestically or cross border and the year of the announcement. Based on the market model, table 4 shows that the coefficient of hostile (B = 0.093) with t = 2.146 is significant at the 5 percent level as well, indicating a 9.3 percent higher positive effect on European target firm shareholders’ wealth than friendly M&As. Similar, the insignificance of the other variables suggest that the wealth gains of European listed target firms are not influenced

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Table 4

Multivariate regression results for European target firms by different characteristics

This table shows multivariate regression results measured over the event window [-1, 1] for European listed target firms by different characteristics based on the constant mean return model (MeanAdj) and the market model (MarketAdj) (standard error between parentheses).

Multivariate regression CAR (MeanAdj) CAR (MarketAdj)

Constant 0.020 0.218 0.022 0.240

(0.093) (0.093)

(0.043) (0.043)

(0.051) (0.051)

(0.058) (0.058)

(0.086) (0.086)

(0.108) (0.108)

(0.090) (0.090)

(0.084) (0.084)

(0.125) (0.125)

(0.153) (0.153)

(0.112) (0.112)

(0.106) (0.106)

(0.133) (0.133)

(0.107) (0.107)

(0.131) (0.131)

(0.102) (0.102)

(0.131) (0.131)

(0.152) (0.152)

R2 0.208 0.202

Standard error of the regression 0.184109970451 0.184227903964

F-Statistic 0.925 0.894

p-value 0.550 0.583

Observations 78 78

a

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Table 5

Cumulative abnormal returns for European target firms.

This table shows cumulative abnormal returns measured over the event window [-10, 10] for European listed target firms based on the constant mean return model (MeanAdj) and the market model (MarketAdj).

t-Test: unequal variances CAR (MeanAdj) CAR (MarketAdj)

Average CAR 0.162434707 0.167218169

Variance 0.058782421 0.057459029

Observations 78 78

Hypothesized mean difference 0 0

Df 77 77 t-Statistic 5.917011289 6.161005874 p-value 0.00427339 0,00153278 a Significant at 1% level b Significant at 5% level c Significant at 10% level

by the manner of payment, the fact whether the M&A took place domestically or cross border and the year of the announcement

4.2. Target shareholder wealth effects in the event window [-10, 10]

In this section I focused on univariate analyses of the bid premiums in the event window [-10, 10]. I related the cumulative abnormal returns to one specific driver at a time. In addition, in section 4.2.6., I estimated the impact for all the explanatory factors simultaneously.

4.2.1. Target firms

From table 5 you will find the average values of the cumulative abnormal returns based on the constant mean return model and the market model. Table 5 shows that the announcement of a takeover bid caused substantial positive cumulative abnormal returns for the shareholders of European targets. For the event window [-10, 10], cumulative abnormal returns of 16.24 percent were realized based on the constant mean return model and cumulative abnormal returns of 16.72 percent based on the market model. Both values, with t-statistic values of 5,92 and 6.16, are

significant at the 1 percent level. In the next section, I related the cumulative abnormal returns to the characteristic hostile.

4.2.2. Hostile versus friendly bids

Here, similar to section 4.1.1., I analyzed the market reactions to the deal attitude of the M&As. From table 6 panel A, you can see a strong positive announcement effect for hostile M&As as well as for friendly mergers and acquisitions. Based on the constant mean return model, I found that hostile target firms showed announcement period cumulative abnormal returns of 22.5 percent whereas friendly targets showed cumulative abnormal returns of 10.0 percent. Based on the market model, I

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Table 6

Cumulative abnormal returns of European target firms by different characteristics

This table shows cumulative abnormal returns measured over the event window [-10, 10] for European listed target firms by different characteristics based on the constant mean return model (MeanAdj) and the market model (MarketAdj). Panel A shows the influence of deal attitude (hostile and friendly) on the cumulative abnormal return. Panel B shows the relation between the cumulative abnormal return and whether the M&A took place domestically or cross border (international). Panel C shows the influence of manner of payment (cash, mixed, stock or unknown) on the cumulative abnormal return. (Standard errors between parentheses).

Univariate regressions Panel A: CAR (MeanAdj) Panel B: CAR (MarketAdj)

Panel A: Deal attitude

Constant 0.100 2.649a 0.111 2.960a

(0.038) (0.038)

(0.053) (0.053)

Panel B: Cross border

Constant 0.154 4.613a 0.157 4.749a

(0.033) (0.033)

(0.059) (0.058)

Panel C: Manner of payment

Constant 0.124 2.101b 0.130 2.233b

(0.059) (0.058)

(0.069) (0.068)

(0.097) (0.096)

found that hostile target firms showed announcement period cumulative abnormal returns of 22.3 percent whereas friendly targets showed cumulative abnormal returns of 11.1 percent.

Based on the constant mean return model, from table 6 panel A, the coefficient of hostile (B = 0.125) indicates that hostile has quite an influence on the value of the cumulative abnormal return. The t-statistic of 2.340 is significant at the 5 percent level, indicating that the factor hostile caused a 12.5 percent higher positive effect on European target firm shareholders’ wealth than domestic M&As. Similar, based on the market model, the coefficient of hostile (B = 0.112) from table 6 panel A indicates that hostile has an influence on the value of the cumulative abnormal return. The t-statistic of 2.112 is significant at the 5 percent level, indicating that the factor hostile caused a 11.2 percent higher positive effect on target firm shareholders’ wealth than domestic M&As. These findings are in line with the studies of Higson and Elliot (1998) and Servaes (1991).

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Table 6 continued

Cumulative abnormal returns of European target firms by different characteristics

This table shows cumulative abnormal returns measured over the event window [-1, 1] for European listed target firms by different characteristics based on the constant mean return model (MeanAdj) and the market model (MarketAdj). Panel D shows the influence of year of announcement on the cumulative abnormal return. (Standard errors between parentheses).

Panel D: Year of announcement

Constant 0.125 1.318 0.128 1.357

(0.095) (0.094)

(0.122) (0.120)

(0.111) (0.110)

(0.158) (0.156)

(0.202) (0.200)

(0.147) (0.146)

(0.140) (0.139)

(0.174) (0.172)

(0.140) (0.139)

Announcement year 2009 (dummy) 0.036 0.208 -0.013 -0.074

(0.174) (0.172)

(0.135) (0.133)

(0.174) (0.172)

4.2.3. Domestic versus cross border M&As

Based on the constant mean return model, Table 6 panel B shows that the coefficient of international (B = 0.025) has a minor influence on the value of the cumulative abnormal return. In addition, the insignificance of the variable international (t = 0.421) suggests that the wealth gains for shareholders of European target firms are not influenced by the fact whether the M&A took place domestically or cross border. Similar, based on the market model, table 6 panel B shows that the coefficient of international (B = 0.032) has a minor influence on the value of the CAR. The

insignificance of the variable international (t = 0.541) suggest that the wealth gains of European target firms are not influenced by the fact whether the merger or acquisition took place domestically or cross border.

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4.2.4. Mean of payment in takeover bids

Similar to section 4.1.4., Table 6 panel C, based on the constant mean return model, the coefficients of cash (B = 0.071), mixed (B = 0.013) and stock (B = -0.108) indicate that cash, mixed and stock have a minor influence on the value of the cumulative abnormal return. None of the variables cash (t = 1.101), mixed (t = 0.131) or stock (t = -0.801) are significant, indicating that the manner of payment is not related to the value of CAR. Similar, based on the market model, table 3 panel C shows that the coefficients of cash (B = 0.069), mixed (B = 0.009) and stock(B = -0.106) have a minor influence on the value of CAR. The insignificance of the variables cash (t = 1.012), mixed (t = 0.097) and stock (t = -0.793) suggest that the wealth gains of European target firms are not influenced the manner of payment.

4.2.5. Deals sorted by announcement year

Table 6 panel D provides the coefficients of the independent time variables based on the constant mean return model. The table shows that the coefficients are all very small, meaning a minor influence on the value of the cumulative abnormal return. The t-values of all the independent variables are insignificant, indicating that time is not related to the value of cumulative abnormal return. Moreover, table 6 panel D shows that the coefficients of the independent time variables based on the market model are all very small as well. Again, none of the values is significant meaning that the year of the announcement of the takeover is not related to the value of CAR.

4.2.6. Determinants of shareholder wealth effects for European targets

Once more, like section 4.1.6., I regressed the cumulative abnormal returns of the European target firms over the event window [-10, 10] on variables capturing the deal attitude (friendly or hostile M&A), whether the M&A took place domestically or cross border, the means of payment (cash, a mix of cash and stock, stock or unknown) and the year of announcement of the M&A. Table 7, based on the constant mean return model, shows a positive announcement effect for hostile M&As. The coefficient of hostile (B = 0.120) with t = 2.049 is significant at the 5 percent level,

indicating that the factor hostile caused a 12.0 percent higher positive effect on European target firm shareholders’ wealth than friendly M&As. The insignificance of the other variables suggest that the wealth gains of European listed target firms are not influenced by the manner of payment, the fact whether the M&A took place domestically or cross border and the year of the announcement. Based on the market model, table 7 shows that the coefficient of hostile (B = 0.109) with t = 1.874 is significant at the 10 percent level, indicating a 10.9 percent higher positive effect on European target firm shareholders’ wealth than friendly M&As. Similar, the insignificance of the other variables suggest that the wealth gains of European listed target firms are not influenced by the manner of

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Table 7

Multivariate regression results for European target firms by different characteristics

This table shows multivariate regression results measured over the event window [-1, 1] for European listed target firms by different characteristics based on the constant mean return model (MeanAdj) and the market model (MarketAdj) (standard error between parentheses).

Multivariate regression Panel A: CAR (MeanAdj) Panel B: CAR (MarketAdj)

Constant 0.060 0.477 0.062 0.500

(0.125) (0.124)

Hostile takeover (dummy) 0.120 2.049b 0.109 1.874c

(0.058) (0.058)

(0.069) (0.068)

(0.078) (0.078)

Mixed payment (dummy) -0.007 -0.057 -0.005 -0.048

(0.115) (0.114)

(0.146) (0.145)

Announcement year 2001 (dummy) -0.020 -0.165 0.008 0.066

(0.121) (0.120)

(0.113) (0.112)

(0.168) (0.166)

(0.206) (0.204)

(0.151) (0.150)

(0.143) (0.142)

(0.179) (0.178)

Announcement year 2008 (dummy) -0.013 -0.088 0.017 0.120

(0.144) (0.143)

(0.176) (0.175)

(0.137) (0.136)

(0.176) (0.175)

(0.205) (0.203)

R2 0.187 0.182

Standard error of the regression 0.24765307783 0.24561587809

F-Statistic 0.812 0.785

p-value 0.674 0.703

Observations 78 78

a

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payment, the fact whether the M&A took place domestically or cross border and the year of the announcement.

5. Conclusion

In this study I analyzed the market reactions to 78 takeovers, consisting of 39 hostile and 39 friendly M&As. The wealth effects found in this paper are in line with the results found by Healy, Palepu and Ruback (1992), Jarrell and Poulsen (1989) and Kaplan and Weisbach (1992). I found, for the event window [-1, 1], cumulative abnormal returns of 11.63 percent based on the constant mean return model and cumulative abnormal returns of 11.86 percent based on the market model. Both values, with t-statistic values of 5,62 and 5,75, are significant at the 1 percent level. For the event window [-10, 10], I found cumulative abnormal returns of 16.24 percent based on the constant mean return model and cumulative abnormal returns of 16.72 percent based on the market model. Again, both values, with t-statistic values of 5,92 and 6.16, are significant at the 1 percent level. European M&As will create value for European targeted firms or in other words there is a positive abnormal return associated with an M&A announcement for a European targeted firm.

The purpose of my regression analyses was to estimate how the following factors affect the cumulative abnormal return of a target firm. I executed the univariate analyses and the multivariate analyses based on the constant return model and the market model for the event windows [-1, 1] and [-10, 10]. I made a distinction between the following variables:

- if the M&A was hostile or friendly;

- whether the M&A took place domestically or cross border (international); - if the payment is by cash, stock, a mix of cash and stock or unknown; - time variable.

The three variables cross border, manner of payment and the time variable did not have a significant influence on the value creation of the M&As around the announcement date for the European listed targets. Both in the event window [-1, 1] and the window [-10, 10], based on the constant mean return model and the market model, the coefficients from table 3 and table 6 are all very small with insignificant t-values, indicating that the variables do not have a significant influence on the shareholders’ wealth of European targets.

However, the factor hostile deserves some special attention. I found strong positive announcement effects for hostile M&As as well as for friendly mergers and acquisitions no matter the event window or model used at the 5 and 10 percent significant levels. Moreover, based on the constant mean return model and the market model, the factor hostile caused respectively a 10.4 percent and a 10 percent higher positive effect on European target firm shareholders’ wealth than domestic M&As. In addition, in the event window [-10, 10] I found similar results. Based on the

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constant mean return model and the market model, the factor hostile caused respectively a 12.5 percent and a 11.2 percent higher positive effect on European target firm shareholders’ wealth than friendly M&As. This findings are in line with the existing literature.

Even in the multivariate regressions, I found similar results in favor of hostile M&As. Based on the constant mean return model, I found a coefficient for hostile of B = 0.097 (with t = 2.232 significant at the 5 percent level) indicating that the factor hostile caused a 9.7 percent higher positive effect on European target firm shareholders’ wealth than friendly M&As. Finally, in the market model, the coefficient of hostile B = 0.120 (with t = 2.0.49 is significant at the 5 percent level) indicating that the factor hostile caused a 12.0 percent higher positive effect on European target firm shareholders’ wealth than friendly M&As.

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Appendix

Overview friendly deals

This table shows the 39 friendly deals including the announcement date of the M&A, the name of the target, the name of the acquirer, the target Datastream code, the manner of payment and whether the M&A took place domestically (N) or cross border (Y).

Number

Announcement

date

Target Name Acquiror Name

Target datastream code % of cash % of other % of stock % of

unknown Cross border

1 16-5-2012 Brinova Fastigheter

AB Backahill Holding AB 28126K 100 - - - N

2 28-9-2011 Supra SA Supra Holding SAS 701882 100 - - - N

3 16-9-2010 Fashion Box Hellas

SA Diamond Lamda Capital SA 26654W - - - 100 N 4 11-8-2010 BHE Beteiligungs-AG MKBH Beteiligungs GmbH 951660 100 - - - N

5 8-6-2010 Braemar Group PLC Brooks Macdonald

Group PLC 28944E 100 - - - N

6 5-5-2010 Aker BioMarine ASA Aker Seafoods

Holding AS 671925 100 - - - N

7 23-10-2009 Helgeland

Sparebank

Protector Eiendom

AS 284750 100 - - - N

8 3-7-2008 Jerini AG Maia Elfte 32187V 100 - - - Y

9 20-6-2008 Atos SE PAI Partners SAS 740622 - - - 100 N

10 26-2-2008 Aldeta SA Societe Immobiliere

Haussmann 892198 - - - 100 N

11 2-4-2007 Loulis SA Leipnik Ludenburger

Invest 692831 100 - - - Y

12 5-5-2006 QA PLC InterQuad Group Ltd 943607 100 - - - N

13 13-3-2006 Potagua A/S FLSmidth & Co A/S 749889 - - 100 - N

14 1-3-2006 Axel Springer SE Michael Lewis 688869 - - - 100 Y

15 30-9-2005 Nelson Resources

Ltd

Lukoil Overseas

Holding Ltd 329642 100 - - - Y

16 13-5-2005 Edison SpA Transalpina di

Energia Srl 772686 - - - 100 Y

17 2-2-2004 Maitre Fournil NutriXo SAS 692541 - - - 100 N

18 23-5-2003 Burgman Heybroek

NV Spijker Holding BV 932831 - - - 100 N

19 27-2-2003 Kipa Kitle Pazarlama

Ticaret Tesco PLC 891261 - - - 100 Y

20 8-11-2002 Eurocity Properties

PLC

Panther Securities

PLC 290688 100 - - - N

21 16-10-2002 MR et Associes France Thermes 776585 100 - - - N

22 31-5-2002 CeNeS Pharmaceuticals PLC Investor Group 888439 100 - - - N 23 20-5-2002 Aurea ACESA 755332 - - 100 - N 24 16-5-2002 GroupeCyber Alten SA 276550 100 - - - N 25 13-5-2002 Locamur-Sofigros(Locafrance) IPFO(Credit Agricole Indosuez) 772641 100 - - - N 26 19-3-2002 Agricultural Bank of Lithuania Nord/LB 685109 - - - 100 Y 27 15-3-2002 Labeyrie(Suez Lyonnaise Eaux) Financiere de Kiel SAS 692703 100 - - - Y 28 14-3-2002 BHV(Societe

Anonyme des) Galeries Lafayette SA 929182 100 - - - N

29 29-1-2002 Inter-Alliance Group

PLC

The Evolution Group

PLC 671927 100 - - - N

30 1-10-2001 Crossair AG Investor Group 945198 100 - - - N

31 10-9-2001 Gucci Group NV Pinault

Printemps-Redoute 867066 93,07 6,93 - - Y

32 24-8-2001 Budimex SA(Grupo

Ferrovial SA) Kredyt Bank PBI SA 152318 - - - 100 N

33 27-6-2001 Expand SA StudioCanal 745155 100 - - - N

34 1-4-2001 Dresdner Bank AG Allianz AG 879203 37,7 - 62,3 - N

35 14-3-2001 BPT PLC Bromley Property

Holdings Ltd 904920 100 - - - N

36 31-3-2000 Dorling Kindersley

Holdings Pearson PLC 301866 100 - - - N

37 29-3-2000 British Borneo Oil &

Gas PLC Eni SpA 904122 33,39 66,61 - - Y

38 9-2-2000 Michael Weinig AG Hohenstaufen

Vierunvierzigste 504634 100 - - - N

39 2-7-2000 Banco Portugues do

Atlantico

Banco Comercial

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Overview hostile deals

This table shows the 39 hostile deals including the announcement date of the M&A, the name of the target, the name of the acquirer, the target Datastream code, the manner of payment and whether the M&A took place domestically (N) or cross border (Y).

Number Announcement

date Target Name Acquiror Name

Target datastream code % of cash % of other % of stock % of

unknown Cross border

40 16-5-2012 Azoty Tarnow Norica Holding Sarl 53643T - - - 100 Y

41 7-10-2011 Fonciere Paris France SA PHRV SA 32977W - - - 100 N 42 27-9-2011 Clarity Commerce Solutions PLC Enigmatic Investments Ltd 298733 100 - - - Y 43 16-9-2010 Hochtief AG ACS 929018 - - 100 - Y

44 4-6-2010 Wilex AG dievini Hopp BioTech

holding 413326 - - - 100 N

45 5-5-2010 Vita Nova Ventures

AB Ve-N-Ve Intressenter AB 29075X 100 - - - N

46 23-10-2009 Valtech SA Siegco SA 692779 - - - 100 Y

47 10-7-2009 Venture Production

PLC

Centrica Resources (UK)

Ltd 257906 100 - - - N

48 3-7-2008 Instore PLC Seaham Investments Ltd 917570 100 - - - N

49 18-6-2008 Zentiva NV Sanofi-Aventis SA 29239D 100 - - - Y

50 26-2-2008 AGR Group ASA Altor Oil Service Invest

AS 36209C 100 - - - Y

51 25-4-2007 ABN-AMRO

Holding NV RFS Holdings BV 505972 92,81 - 7,19 - Y

52 2-4-2007 Endesa SA Investor Group 701720 100 - - - Y

53 5-5-2006 Metrovacesa SA Investor Group 929529 100 - - - N

54 13-3-2006 Banco BPI SA Banco Comercial

Portugues SA 741585 100 - - - N

55 1-3-2006 Metrovacesa SA Cresa Patrimonial SL 929529 - - - 100 N

56 29-9-2005 Telindus Group NV Belgacom SA 702097 100 - - - N

57 13-6-2005 Leica Geosystems

AG Hexagon AB 289381 78,36 - 21,64 - Y

58 13-5-2005 Foersaekrings AB

Skandia Old Mutual PLC 702980 37,84 - 62,16 - Y

59 26-1-2004 Aventis SA Sanofi-Synthelabo SA 308549 30,42 - 69,58 - N

60 22-5-2003 NH Hoteles SA Grupo Inversor Hesperia

SA 997952 100 - - - N

61 26-2-2003 Oxford

GlycoSciences PLC Celltech Group PLC 679103 - - - 100 N

62 7-11-2002 Pathfinder

Properties PLC

Sunnyview(AR & V

Investments) 888595 100 - - - N

63 16-10-2002 Crown Sports PLC Bennelong UK

Ltd(Chapman) 135867 100 - - - N

64 31-5-2002 Esporta PLC Duke Street Capital

Leisure 284309 100 - - - N

65 20-5-2002 Partek AB Oy KONE Oyj 701911 - 58,46 - 41,54 N

66 15-5-2002 Castorama Dubois Kingfisher PLC 950680 100 - - - Y

67 13-5-2002 TEAMtalk Media

Group Plc ukbetting PLC 290119 100 - - - N

68 19-3-2002 Iberica de

Autopistas SACE ACESA 772359 100 - - - N

69 14-3-2002 Queens Moat Houses PLC Trefick Ltd 905501 100 - - - Y 70 12-3-2002 Enaco Caprabo SA 692028 - - - 100 N 71 1-10-2001 Warner Estate Holdings PLC Trefick Ltd 905839 100 - - - Y 72 10-9-2001 FAG Kugelfischer Georg Schaefe Ina Holding-Schaeffler Group 702699 100 - - - N

73 24-8-2001 Spuetz AG NewMedia Spark PLC 688190 100 - - - Y

74 31-3-2001 HIDROCANTABRICO Ferroatlantica SL 929548 67,7 32,3 - - N

75 14-3-2001 H Young Holdings

PLC Lakefield Holdings Ltd 914427 100 - - - N

76 31-3-2000 Laser-Scan

Holdings PLC Yeoman Group PLC 900224 27,95 - 72,05 - N

77 26-3-2000 Big Star Holding AG Tsufa AG 531905 100 - - - N

78 8-2-2000 Gildemeister

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Cumulative abnormal returns of the European target firms

This table shows the cumulative abnormal returns of the European target firms for the 39 friendly deals used in this paper based on the constant mean return model and the market model in the event window [-1, 1].

Number Name EventDate CAR (MeanAdj) CAR (MarketAdj)

1 28126K 16-5-2012 -0,0246939 -0,0175782 2 701882 28-9-2011 0,0050303 0,0135988 3 26654W 16-9-2010 0,0519252 0,0638748 4 951660 11-8-2010 -0,0053033 0,0035727 5 28944E 8-6-2010 0,5478711 0,5485331 6 671925 5-5-2010 -0,0518259 -0,0221312 7 284750 23-10-2009 0,0088719 0,0134533 8 32187V 3-7-2008 0,8005618 0,8062366 9 740622 20-6-2008 0,0583805 0,0779939 10 892198 26-2-2008 -0,0012247 0,0067353 11 692831 2-4-2007 0,0007814 0,0005048 12 943607 5-5-2006 0,1325446 0,1376069 13 749889 13-3-2006 -0,0032192 -0,0050157 14 688869 1-3-2006 -0,0031622 -0,0027667 15 329642 30-9-2005 -0,1470958 -0,1521907 16 772686 13-5-2005 -0,0168674 -0,0171359 17 692541 2-2-2004 -0,0076431 -0,008131 18 932831 23-5-2003 -0,0003488 -0,000382 19 891261 27-2-2003 0,1462849 0,1420015 20 290688 8-11-2002 0,1009396 0,1016699 21 776585 16-10-2002 -0,0004576 -0,0112253 22 888439 31-5-2002 -0,0086925 -0,0058365 23 755332 20-5-2002 0,0664286 0,0712807 24 276550 16-5-2002 0,1385727 0,1334729 25 772641 13-5-2002 0,0056662 0,0041232 26 685109 19-3-2002 -0,0018652 -0,0016613 27 692703 15-3-2002 -0,0049639 -0,0070542 28 929182 14-3-2002 0,0101502 0,0077685 29 671927 29-1-2002 -0,0521148 -0,0442918 30 945198 1-10-2001 0,041049 0,0387785 31 867066 10-9-2001 0,0340013 0,1025296 32 152318 24-8-2001 0,0614349 0,0538717 33 745155 27-6-2001 0,0025929 -1,28E-05 34 879203 1-4-2001 0,0023407 0,0013556 35 904920 14-3-2001 0,0237794 0,0254997 36 301866 31-3-2000 -0,0038342 0,0018263 37 904122 29-3-2000 0,4853121 0,4977666 38 504634 9-2-2000 0,1193766 0,1189202 39 540186 2-7-2000 -0,0059293 -0,0114102

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This table shows the cumulative abnormal returns of the European target firms for the 39 hostile deals used in this paper based on the constant mean return model and the market model in the event window [-1, 1].

40 53643T 16-5-2012 0,1346652 0,1518242 41 32977W 7-10-2011 0,0647228 0,0602126 42 298733 27-9-2011 0,3949357 0,3903399 43 929018 16-9-2010 0,0605579 0,0844817 44 413326 4-6-2010 0,0163138 0,0312923 45 29075X 5-5-2010 0,1389708 0,14341 46 692779 23-10-2009 0,0040419 0,0219144 47 257906 10-7-2009 0,0439898 0,0224623 48 917570 3-7-2008 0,0914905 0,0904392 49 29239D 18-6-2008 0,1345478 0,1400735 50 36209C 26-2-2008 0,2456582 0,2127757 51 505972 25-4-2007 0,0164123 0,0186918 52 701720 2-4-2007 -0,0193538 -0,0288629 53 929529 5-5-2006 0,0371834 0,0275753 54 741585 13-3-2006 0,2827605 0,2777173 55 929529 1-3-2006 0,1833853 0,1935868 56 702097 29-9-2005 0,2558668 0,251398 57 289381 13-6-2005 0,1726579 0,1682465 58 702980 13-5-2005 0,180815 0,1791054 59 308549 26-1-2004 0,0526331 0,0558489 60 997952 22-5-2003 0,1944502 0,1937807 61 679103 26-2-2003 0,0048874 0,0107947 62 888595 7-11-2002 0,2066332 0,2211495 63 135867 16-10-2002 0,9125283 0,894399 64 284309 31-5-2002 -0,0004862 0,0004521 65 701911 20-5-2002 0,2307772 0,2340372 66 950680 15-5-2002 0,0546574 0,0454841 67 290119 13-5-2002 0,1946757 0,1929968 68 772359 19-3-2002 0,100196 0,1000872 69 905501 14-3-2002 0,4590321 0,4583166 70 692028 12-3-2002 0,4780703 0,4813788 71 905839 1-10-2001 0,0886265 0,0863289 72 702699 10-9-2001 0,4279676 0,473486 73 688190 24-8-2001 0,2635733 0,2487781 74 929548 31-3-2001 0,0152124 0,0235217 75 914427 14-3-2001 0,1558957 0,1571469 76 900224 31-3-2000 0,121819 0,1148117 77 531905 26-3-2000 0,1498113 0,1485579 78 866250 8-2-2000 0,0141035 0,0065363

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This table shows the cumulative abnormal returns of the European target firms for the 39 friendly deals used in this paper based on the constant mean return model and the market model in the event window [-10, 10].

1 28126K 16-5-2012 0,035435 0,0545908 2 701882 28-9-2011 0,0396425 0,0566029 3 26654W 16-9-2010 0,0359861 0,0469225 4 951660 11-8-2010 0,1627213 0,1811591 5 28944E 8-6-2010 0,6305661 0,6242972 6 671925 5-5-2010 -0,7118331 -0,6417484 7 284750 23-10-2009 0,1458643 0,1429172 8 32187V 3-7-2008 0,8582958 0,8980552 9 740622 20-6-2008 -0,0513802 0,049563 10 892198 26-2-2008 -0,0085728 -0,0142809 11 692831 2-4-2007 0,1672712 0,1657863 12 943607 5-5-2006 0,278187 0,2479293 13 749889 13-3-2006 -0,0225343 -0,0223319 14 688869 1-3-2006 0,0151993 0,0148214 15 329642 30-9-2005 -0,1985128 -0,1819981 16 772686 13-5-2005 0,0147471 0,0046607 17 692541 2-2-2004 -0,0473035 -0,0470351 18 932831 23-5-2003 -0,0024418 -0,002892 19 891261 27-2-2003 0,1044548 0,1086719 20 290688 8-11-2002 0,6615666 0,6604127 21 776585 16-10-2002 0,3771721 0,3668608 22 888439 31-5-2002 0,2247091 0,26074 23 755332 20-5-2002 0,0341976 0,0464933 24 276550 16-5-2002 0,2500089 0,2215271 25 772641 13-5-2002 0,0419523 0,0437315 26 685109 19-3-2002 -0,0130564 -0,0105059 27 692703 15-3-2002 -0,0290574 -0,0373296 28 929182 14-3-2002 0,0089672 -0,0046939 29 671927 29-1-2002 0,3389252 0,3195969 30 945198 1-10-2001 0,194914 0,1838442 31 867066 10-9-2001 0,0182183 0,1530026 32 152318 24-8-2001 0,1271175 0,1512614 33 745155 27-6-2001 -0,1126296 -0,0695583 34 879203 1-4-2001 0,0048676 0,0062394 35 904920 14-3-2001 -0,0065841 0,0037739 36 301866 31-3-2000 0,0188662 0,0263631 37 904122 29-3-2000 0,2841881 0,2987106 38 504634 9-2-2000 0,084521 0,0837524 39 540186 2-7-2000 -0,0548874 -0,0549785

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This table shows the cumulative abnormal returns of the European target firms for the 39 hostile deals used in this paper based on the constant mean return model and the market model in the event window [-10, 10].

40 53643T 16-5-2012 0,0911378 0,1373307 41 32977W 7-10-2011 0,0660723 0,0571888 42 298733 27-9-2011 0,5545689 0,54836 43 929018 16-9-2010 0,105659 0,1275543 44 413326 4-6-2010 0,5237809 0,487559 45 29075X 5-5-2010 0,1691212 0,1795985 46 692779 23-10-2009 0,260667 0,2491703 47 257906 10-7-2009 0,0782764 -0,0470465 48 917570 3-7-2008 -0,2697073 -0,2770733 49 29239D 18-6-2008 0,1788736 0,2288193 50 36209C 26-2-2008 0,2264522 0,2500323 51 505972 25-4-2007 0,0476951 0,0357177 52 701720 2-4-2007 0,019608 -0,0314411 53 929529 5-5-2006 -0,0033598 0,0540687 54 741585 13-3-2006 0,286009 0,2865771 55 929529 1-3-2006 0,1382837 0,128537 56 702097 29-9-2005 0,2878145 0,3020457 57 289381 13-6-2005 0,1430983 0,1333358 58 702980 13-5-2005 0,2145107 0,1502894 59 308549 26-1-2004 0,2093024 0,1863431 60 997952 22-5-2003 0,0846789 0,054237 61 679103 26-2-2003 0,2344263 0,258561 62 888595 7-11-2002 0,2252662 0,1967609 63 135867 16-10-2002 0,7909236 0,7735627 64 284309 31-5-2002 0,1030933 0,114931 65 701911 20-5-2002 0,2801996 0,2884607 66 950680 15-5-2002 0,0856971 0,1055097 67 290119 13-5-2002 0,4871457 0,4890815 68 772359 19-3-2002 0,0958182 0,0944573 69 905501 14-3-2002 0,7225058 0,7184018 70 692028 12-3-2002 0,6129875 0,5910026 71 905839 1-10-2001 0,1020132 0,0908112 72 702699 10-9-2001 0,4731933 0,5627208 73 688190 24-8-2001 0,388004 0,4352347 74 929548 31-3-2001 -0,1166386 -0,1282097 75 914427 14-3-2001 0,3276777 0,3352117 76 900224 31-3-2000 0,2780269 0,2687464 77 531905 26-3-2000 0,1457594 0,1477016 78 866250 8-2-2000 0,1214965 0,123933

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