Descriptive statistics of the metric variables
| Mean | St. Dev. | Min | Pctl(25) | Median | Pctl(75) | Max | |
|---|---|---|---|---|---|---|---|
| PREM1DAY | 12.493 | 42.146 | −81.368 | −6.440 | 5.170 | 25.565 | 239.202 |
| PREM1WEEK | 14.656 | 43.419 | −81.030 | −5.185 | 7.140 | 28.925 | 245.138 |
| PREM4WEEK | 17.365 | 46.330 | −81.192 | −4.850 | 10.000 | 33.125 | 268.779 |
| lnDEALVAL | 3.677 | 2.024 | 0.001 | 2.145 | 3.554 | 5.023 | 11.890 |
| LEVERAGE | 0.521 | 0.337 | 0.008 | 0.304 | 0.505 | 0.695 | 2.954 |
| ROCE | −0.015 | 0.240 | −2.105 | −0.023 | 0.026 | 0.069 | 0.550 |
| B2MR | 0.923 | 1.084 | −1.899 | 0.313 | 0.638 | 1.190 | 6.728 |
Regression results
| Model 0 | Model 1 | Model 2 | |
|---|---|---|---|
| Dependent Variable | PREM1WEEK | PREM1WEEK | PREM1WEEK |
| coeff. | coeff. | coeff. | |
| Independent Variable | t-value | t-value | t-value |
| MBR.20 | 5.336** | ||
| −2.080 | |||
| MBR.25 | −4.556* | ||
| −2.691 | |||
| MBR.30 | −3.110* | ||
| −1.734 | |||
| MBR.33 | −0.927 | ||
| −1.623 | |||
| MBR.Larger.33 | −5.400*** | ||
| −2.092 | |||
| lnDEALVAL | 3.679*** | 2.348*** | 2.354*** |
| 0.164 | (0.185) | (0.185) | |
| PAYMENTCash | 4.270*** | 12.726*** | 12.857*** |
| −1.217 | −1.304 | −1.306 | |
| ATTITUDEHostile | 8.214** | 8.701** | 8.164** |
| −3.505 | −3.636 | −3.652 | |
| CROSSBORDER | 2.558*** | 4.244*** | 4.281*** |
| (0.988) | (0.982) | (0.982) | |
| SECTOR.RELATED | 0.295 | −0.594 | −0.618 |
| −1.022 | −1.014 | −1.013 | |
| PUBLIC.ACQPublic | 3.252*** | 2.603*** | 2.652*** |
| (0.668) | (0.658) | (0.657) | |
| LEVERAGE | 3.046** | 2.406* | 2.278 |
| −1.426 | −1.420 | −1.421 | |
| ROCE | −10.345*** | −11.485*** | −11.709*** |
| −2.153 | −2.138 | −2.132 | |
| B2MR | 10.587*** | 9.905*** | 9.871*** |
| (0.473) | (0.473) | (0.473) | |
| Control Intervals | ✓ | ✓ | |
| Industry Acquiror | ✓ | ✓ | ✓ |
| Industry Target | ✓ | ✓ | ✓ |
| Nation Target | ✓ | ✓ | ✓ |
| Nation Acquiror | ✓ | ✓ | ✓ |
| Year | ✓ | ✓ | ✓ |
| λ | 1.180 | 2.070 | 2.076 |
| −1.999 | −1.955 | −1.951 | |
| Constant | −21.894*** | −27.934*** | −27.104*** |
| −3.044 | −3.083 | −3.113 | |
| Observations | 22,187 | 22,187 | 22,187 |
| R2 | 0.184 | 0.206 | 0.207 |
| Adjusted R2 | 0.176 | 0.198 | 0.199 |
| Residual Std. Error (df = 21956) | 39.413 | 38.882 | 38.854 |
| F Statistic (df = 230; 21956) | 24.352*** | 25.576*** | 25.212*** |
Target nations' thresholds and triggers for mandatory bids
| Target nation | Takeover threshold | Trigger for mandatory offer |
|---|---|---|
| Argentina | 50% | The acquirer alternatively controls the number of shares to determine the company's policy at regular shareholders' meetings or may appoint or revoke the appointment of most of the directors or members of the supervisory committee. |
| Australia | 20% | The acquirer controls share from more than 20% to less than 90%. |
| Austria | 30% | / |
| Belgium | 30% | / |
| Brazil | No threshold | The acquirer controls the target. |
| Canada | 20% | / |
| Chile | No threshold | The acquirer controls two-thirds of the voting rights. |
| China | 30% | / |
| Colombia | 25% | Each acquisition of 5% by a shareholder with 25% triggers a new mandatory offer. |
| Costa Rica | 25% | / |
| Czech Republic | 30% | The acquirer alternatively controls the board. |
| Denmark | 33% | / |
| Estonia | 50% | The acquirer alternatively controls the board. |
| Finland | 30%, 50% | / |
| France | 30% | / |
| Germany | 30% | / |
| Greece | 33% | Each acquisition of 3% by a shareholder with 33–50% within six months, triggers a new mandatory offer. |
| Hong Kong | 30% | Each acquisition of 2% by a shareholder with 30–50% within a year, triggers a new mandatory offer. |
| Hungary | 33% | A mandatory offer can already be triggered at 25% of the voting rights if no other shareholder holds more than 10%. |
| Iceland | 30% | / |
| India | 25% | Each acquisition of 5% by a shareholder with 25% within a year, triggers a new mandatory offer. |
| Indonesia | 50% | The acquirer alternatively controls the board. |
| Ireland | 30% | Alternatively, a mandatory offer will be triggered upon the acquisition of 0.05% consolidating control. |
| Israel | 25%, 45%, 90% | / |
| Italy | 25% | Each acquisition of 5% by a shareholder with 30–50% within a year, triggers a new mandatory offer. |
| Japan | 33% | A mandatory offer will be triggered if the acquirer alternatively controls 5% of the voting rights of 10 or more SHs within 61 days. |
| Korea | No threshold | A mandatory offer is triggered if the acquirer controls 5% of the voting rights of 10 or more SHs. |
| Latvia | 30% | / |
| Lithuania | 33% | / |
| Luxembourg | 33% | / |
| Malaysia | 33% | Each acquisition of 2% by a shareholder with 33–50% within six months triggers a new mandatory offer. |
| Mexico | 30% | The acquirer alternatively controls the target. |
| Netherlands | 30% | / |
| New Zealand | 90% | / |
| Norway | 33%, 40%, 50% | / |
| Peru | 25%, 50%, 60% | / |
| Poland | 33%, 66% | / |
| Portugal | 33%, 66% | / |
| Russia | 30%, 50%, 75% | / |
| Saudi Arabia | 50% | / |
| Singapore | 30% | Each acquisition of 1% by a shareholder with 30–50% within six months triggers a new mandatory offer. |
| Slovak Republic | 30% | The acquirer alternatively controls the board. |
| Slovenia | 33% | / |
| South Africa | 35% | / |
| Spain | 30% |
|
| Sweden | 30% | / |
| Switzerland | 33% | The threshold may be increased up to 49% of the voting rights or canceled by the Company. |
| Turkey | 50% | / |
| United Kingdom | 30% | Each acquisition by a shareholder with 30–50% triggers a mandatory offer. |
Table of variables
| Variable | Previous findings from the literature |
|---|---|
| Deal Value in USD million (DEALVAL) | According to Alexandridis et al. (2013), the size of the target firm is negatively related to the takeover premium level. Furthermore, large businesses frequently have a low ownership concentration of managers (Demsetz & Lehn, 1985), which leads to managers accepting a lower takeover premium (Bauguess et al., 2009). On the other hand, Zhu and Jog (2009) claim that the takeover premium is proportional to the deal size. According to Moeller, Schlingemann, and Stulz (2004), large corporations also have much larger takeover premiums. |
| Consideration Structure (PAYMENT) | Various empirical studies have found that takeover premiums for cash-based deals are much higher than for equity-based transactions. According to Wansley, Lane, and Yang (1987), lower premiums are paid for stock-based transactions since the stock swap creates unrealized profits for the target company's owners. According to Davidson and Cheng (1997), the premium amount in cash-based acquisitions is due to compensation of the target company's shareholders' tax burden.However, Goergen and Renneboog (2004) claim that cash payment relates to an undervaluation of the acquiring company. |
| Deal Attitude (ATTITUDE) | Franks and Mayer (1996) and Jensen (1988) indicate that premiums paid in hostile takeovers are larger than in friendly takeovers. |
| Crossborder Transaction (CROSSBORDER) | According to Swenson (1993) and Rossi and Volpin (2004), cross-border transactions have a significantly larger premium than domestic transactions. Zhu and Jog (2009) analyzed emerging markets and showed that foreign-acquiring companies pay substantially higher premiums than domestic-acquiring companies. |
| Sector Relatedness (SECTOR.RELATED) | In their analysis, Gaspar, Massa, and Matos (2005) claim that target companies receive a higher premium in intra-industry transfers. According to Zhu and Jog (2009), cross-border intra-industry transactions have a larger average takeover premium than domestic transactions. |
| Public Status of the Acquiror (PUBLIC.ACQ) | Bargeron et al. (2008) and Zhu and Jog (2009) differentiate between private and public listed acquirers and show that private acquirers pay a lower premium than public acquirers. |
| Book-to-Market Ration (B2MR) | The book-to-market ration as a price-determining factor implies how expensive an acquisition is (Bargeron et al., 2008; Alexandridis et al., 2013). |
| Leverage of the Target (LEVERAGE) | According to Covrig, McConaughy, and Travers (2015), higher takeover premia are related to higher leverage levels, suggesting that more leveraged targets may receive higher takeover premia. The more leverage a target firm has, the fewer cash or shares an acquirer will need to control it. |
| Return on Capital Employed (ROCE) | The return on capital employed, reflects the profitability of a target company and is a value-driving factor (Pérez-Soba, Márquez-de-la-Cruz & Martínez-Cañete, 2018). |
| Year / Timing / Merger Waves (YEAR) | Many studies show that the development of the M&A market takes on a wave-like course concerning the takeover premium paid. These so-called M&A waves are influenced by macroeconomic factors (Meier, Boysen-Hogrefe & Spoida, 2016). In expansion phases, Lambrecht (2004) shows that the timing of acquisitions is linked to economies of scale. M&A waves, according to Shleifer and Vishny (2003), Rhodes-Kropf, Robinson, and Vishwanathan (2005), and Cai and Vijh (2007), are caused by the stock market overvaluation of acquiring corporations. |
| Industry / Sector (SECTOR.TARGET, SECTOR.ACQ) | Several authors suggest that the takeover premium depends on the acquirer's industry and target (Dutz, 1989; Cakici, Hessel & Tandon, 1991; Meschi, 1997), while others find no relationship between the premium paid and the industry (Alexandridis et al., 2013). |
| Nation (NATION.TARGET, NATION.ACQ) | The acquirer and the target nation can impact the premium paid in an M&A deal. Investor protection also increases M&A activity, according to La Porta et al. (1997). According to Jackson and Miyajima (2007), decreased premiums in the coordinated market economy are accompanied with stakeholder protection. According to Edwards & Fischer (1994) and Levine (2002), the premium paid is influenced by the economy's capital market or bank orientation. |