TY  - JOUR
AU  - Moeller,Sara B.
AU  - Schlingemann,Frederik P.
AU  - Stulz,Rene M.
TI  - Wealth Destruction on a Massive Scale? A Study of Acquiring-Firm Returns in the Recent Merger Wave
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10200
PY  - 2004
Y2  - January 2004
UR  - http://www.nber.org/papers/w10200
L1  - http://www.nber.org/papers/w10200.pdf
N1  - Author contact info:
Sara B. Moeller
Katz Graduate School of Business
University of Pittsburgh
360 Mervis Hall
Pittsburgh, PA 15260
E-Mail: sbmoeller@katz.pitt.edu

Frederik P. Schlingemann
Katz Graduate School of Business
University of Pittsburgh
372 Mervis Hall
Pittsburgh, PA 15260
E-Mail: schlinge@katz.pitt.edu

Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu
AB  - Acquiring-firm shareholders lost 12 cents at the announcement of acquisitions for every dollar spent on acquisitions for a total loss of $240 billion from 1998 through 2001, whereas they lost $7 billion in all of the 1980s, or 1.6 cents per dollar spent. Though the announcement losses to acquiring-firm shareholders in the 1980s are more than offset by gains to acquired-firm shareholders, the losses of bidders exceed the gains of targets from 1998 through 2001 by $134 billion. The 1998-2001 aggregate dollar loss of acquiring-firm shareholders is so large because of a small number of acquisition announcements by firms with extremely high valuations. Without these announcements, the wealth of acquiring-firm shareholders would have increased. The large losses are consistent with the existence of negative synergies from the acquisitions, but the size of the losses in relation to the consideration paid for the acquisitions is large enough that part of the losses most likely results from investors reassessing the standalone value of the bidders. Firms that announce acquisitions with large dollar losses perform poorly afterwards.
ER  -