Acquisition Premiums and Performance Improvements for Acquirers and Targets in the Lodging Industry
نویسندگان
چکیده
Given that the stated purpose of mergers and acquisitions (M&A) is to create value for the newly merged firm, the M&A offer premium ought to be positively related to the realized benefits or realized synergies that result from combining the target and the acquirer. Not all empirical evidence supports this notion, however. Because some M&A activities have not been found to be consistently value enhancing, other M&A motives have been proposed, most notably empire building and personal rewards. In contrast to those notions, this paper’s analysis of lodging M&A results suggests that lodging M&A is in fact motivated by value creation. Furthermore, our evidence supports the supposition that the premium reflects the value of synergy, as postulated conceptually. Using a property-level dataset, this paper infers lodging managers’ intentions by investigating the relationship between the final offer premium paid to the target shareholders and the change in the preand postacquisition operating performance of the target’s and the acquirer’s properties. Refuting the argument of the market for corporate control as well as the non-value-related motives, this analysis finds that the premium is related to the performance changes of the acquirer’s properties but is not related to that of the target’s properties. Interestingly, this suggests that the target’s properties serve as a crucial resource to improve the performance of the acquirer’s properties, and consequently, the premium may be viewed as the payment to gain control over the targets’ resources.
منابع مشابه
A Signaling Theory of Acquisition Premiums: Evidence from Ipo Targets
This article extends signaling theory to research on acquisition premiums and investigates the value that newly public targets capture in post-IPO acquisitions. We complement previous research on acquisition premiums by suggesting that signals about targets can enhance sellers’ gains by reducing acquirers’ offer price discounting that is due to information asymmetries. Specifically, we argue th...
متن کاملProductivity, Restructuring and the Gains from Takeovers
Little is known about the underlying sources of gains from takeovers. Using plant-level data from the U.S. Census Bureau, I show that one source of gains is increased productivity of capital and labor in target plants. In particular, acquirers significantly reduce investments, wages, and employment in target plants, though output is unchanged relative to comparable plants. Acquirers also aggres...
متن کاملDoes product market competition discipline managers? Evidence from exogenous trade shock and corporate acquisitions
This study uses the 1989 Canada-U.S. Free Trade Agreement as a source of exogenous shock to product markets to establish a causal effect of competition on acquisition returns to shareholders. Following the agreement, acquirers exposed to greater increases in competitive pressure experience higher announcement returns. The positive impact of increased competition is stronger in acquirers with re...
متن کاملNewly Listed Firms as Acquisition Targets: The Débutant Effect of IPOs
Both theory and economic intuition suggest that newly listed firms differ from seasoned ones as potential takeover targets. We identify significant differences between the two groups of firms in this regard: (i) IPOs are more likely to be acquired than are seasoned firms, (ii) IPO targets receive higher acquisition premiums, and (iii) IPO targets are associated with greater synergy. These obser...
متن کامل