Value Creation Through M&A

Abstract

The creation of value through mergers and acquisitions (M&A) has been a widely researched field in corporate finance academia. However, there has been a significant gap in the literature regarding the impact of the strategic rationale behind the transaction on shareholder value creation. Furthermore, there is a lack of research on value creation through M&A in Nordic countries. The objective of this thesis is to investigate the creation of value for buyers in Nordic M&A over the past decade and to determine whether there is a correlation between strategic rationale and value creation.

This study analyzes value creation through a dataset that comprises 243 M&A transactions. The trans-actions were announced by Nordic listed companies between January 1, 2010, and December 31, 2019. The methodological approach adopted in this study is threefold, consisting of a short-term event study, an analysis of long-term stock returns, and an examination of long-term changes in operational performance measures to examine the acquirer's value creation. The strategic rationale of each trans-action is categorized through careful analysis of the buyer's acquisition announcements.

The results of the event study demonstrate significantly positive abnormal returns when a M&A trans-action is announced. Long-term the average buy-and-hold abnormal return is also significantly posi-tive. This makes clear implications of value creation for the shareholders in companies involved in M&A as acquirers. In opposite, the thesis finds significant value destruction when it comes to the op-erational performance measures. Regarding the strategic rationales the thesis finds no significant dif-ference in the value creation from M&A.

On this basis, the thesis concludes that M&A transactions in general have been value creating in the Nordics between 2010 and 2019. Furthermore, no observed connection was found between an-nounced strategic rationale and value creation.