Værdiskabelsen i akkvisitioner og fusioner: En empirisk analyse

Ludvig Kjærulff

Student thesis: Master thesis


In absence of the expected value creation in recent corporate mergers and acquisitions, it is necessary to investigate the driving forces behind the value creation and its economic impact on the shareholders of the acquiring companies. This thesis investigates the wealth effect of corporate mergers and acquisitions on the acquiring companies’ shareholders. Based on a synthesis of the relevant M&A literature I outline a theoretical framework identifying three key variables explaining the shareholders’ wealth effect; the motive behind the transaction, the method of payment and the performance of the company before the transaction. In order to investigate the relationship between these three variables and the wealth effect on the acquiring companies’ shareholders, I analyze the economic impacts of the European transactions with a transaction value above €1.5bn between 2000 and 2008. This analysis is based on the daily share price and the abnormal return around the announcement day of the major transactions. The results show that debt financed transactions tend to be more value creating than any other method of payment. Share financed transactions on the other hand, tend to be the most value destroying method of payment. The performance of the company also has a profound impact on the shareholders’ wealth effect. Good performing companies tend to deliver a positive abnormal return to their shareholders announcing a major transaction, whereas bad performing companies tend to deliver a negative abnormal return. This implies that the motive and the behavior of the management have an impact on the shareholder wealth effect. With these results, I propose an alpha-generating investor strategy that provides a risk free abnormal return on an investment. The strategy is to either buy shares in good performing companies that announce a transaction financed by debt or to go short in shares in bad performing companies that announce a transaction financed by shares. The conclusions emphasize the conflict between shareholders and the management of the multinational companies regarding why and when major transactions actually create or destroy value to the shareholders of these companies.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2009
Number of pages97