| Author: | Maquieira, C. P. Megginson, W. L. Nail, L. |
| Title: | Wealth creation versus wealth redistributions in pure stock-for-stock mergers. |
| Journal: | Journal of Financial Economics
1998 : APR, VOL. 48:1, p. 3-33 |
| Index terms: | CONGLOMERATE MERGERS BOND MARKETS CAPITAL ASSETS |
| Language: | eng |
| Abstract: | The authors examine wealth changes for all 1283 publicly traded debt and equity securities of firms involved in 260 pure stock-for-stock mergers from 1963 to 1996. They find no evidence that conglomerate stock-for-stock mergers create financial synergies or benefit bondholders' expense. Insted, they document significant net synergistic gains in nonconglomerate mergers and generally insignificant net gains in conglomerate mergers. Conglomerate bidding-firm stockholders lose; all other securityholders at least break even. Convertible securityholders experience the largest gains, due mostly to their attached option values. Certain bond covenants are value-enhancing while leverage increases are value-reducing. |
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