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NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Farzad Saidi

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July 2012Target Revaluation after Failed Takeover Attempts – Cash versus Stock
with Ulrike Malmendier, Marcus Matthias Opp: w18211
Cash- and stock-financed takeover bids induce strikingly different target revaluations. We exploit detailed data on unsuccessful takeover bids between 1980 and 2008, and show that targets of cash offers are revalued on average by +15% after deal failure, whereas stock targets return to their pre-announcement levels. The differences in revaluation do not revert over longer horizons. We find no evidence that future takeover activities or operational changes explain these differences. While the targets of failed cash and stock offers are both more likely to be acquired over the following 8 years than matched control firms, there are no differences between cash and stock targets, neither in the timing nor in the value of future offers. Similarly, we cannot detect differential operational polic...

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