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| Author: | Dunis, C.L. Klein, T. |
| Title: | Analysing mergers and acquisitions in European financial services: an application of real options |
| Journal: | European Journal of Finance
2005 : AUG, VOL. 11:4, p. 339-355 |
| Index terms: | Banking Event studies Financial services Mergers Option prices Europe |
| Language: | eng |
| Abstract: | Real option pricing theory is applied to the analysis of a sample of 15 recent mergers and acquisitions in the European financial services industry. Overall, it is found that those acquisitions were not on average overpaid. Nevertheless, further analysis, assuming the option premium equalled the takeover premium, shows that either the implicity assumed volatility was too low, the assumed time to maturity was very short and/or the assumed subsequent market performance was too optimistic. |
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