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Two-step acquisitions and liquidity spread

Journal of Economics and Finance volume 39, pages 262–287 (2015)Cite this article

Abstract

We hypothesize that macro-level liquidity affects the choice between tender-mergers and mergers. We employ a novel methodology to test this relationship. This method finds structural breaks in the number of tender-mergers relative to mergers and finds that the structural breaks coincide strikingly well with major changes in macro-level liquidity. Consistent with our hypotheses our regression analysis finds that the number of tender offers increases with liquidity and also that the acquirer’s share of synergy increases as tender-mergers increase.

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Notes

  1. A tender-merger is an acquisition which consists of two steps. In the first step the majority of the stocks of the target firm are acquired through a tender offer. In the second step the remaining stocks are acquired through a merger.

  2. The other major action by the Fed during this period is the decrease in Fed funds rate during 2001. This is a reaction to the bursting of the

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Authors and Affiliations

  1. Opus College of Business, University of St Thomas, Minnesota, MCH 316, 2115 Summit Avenue, St Paul, MN, 55105, USA

    Mufaddal Baxamusa & Dobrina Georgieva

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  1. Mufaddal Baxamusa
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  2. Dobrina Georgieva
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Correspondence to Dobrina Georgieva.

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Baxamusa, M., Georgieva, D. Two-step acquisitions and liquidity spread. J Econ Finan 39, 262–287 (2015). https://doi.org/10.1007/s12197-012-9247-6

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  • DOI: https://doi.org/10.1007/s12197-012-9247-6

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