The Impact on UK Acquirers of Domestic, Cross-border, Public and Private Acquisitions

Authors

  • Robert L. Conn,

  • Andy Cosh,

  • Paul M. Guest,

    Corresponding author
      Paul M. Guest, Centre for Business Research, University of Cambridge, Judge Institute of Management Studies Building, Trumpington Street, Cambridge CB2 1AG, UK.
      e-mail: pmg20@cus.cam.ac.uk
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  • Alan Hughes

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    • The first author is at Miami University, Oxford, Ohio, USA, and the second, third and fourth authors are at the Centre for Business Research, Cambridge University, UK. They are grateful for comments provided by seminar participants at Cambridge University, Vienna University, the 2001 EARIE Conference and the 2002 EFMA Conference. They are particularly grateful to an anonymous referee, Paul Laux, Dennis Mueller, Ajit Singh and Burcin Yurtoglu for insightful comments and discussion. (Paper received May 2003, revised and accepted March 2004)


Paul M. Guest, Centre for Business Research, University of Cambridge, Judge Institute of Management Studies Building, Trumpington Street, Cambridge CB2 1AG, UK.
e-mail: pmg20@cus.cam.ac.uk

Abstract

Abstract:  We examine the announcement and post-acquisition share returns of UK acquirers in over 4,000 acquisitions of domestic, cross-border, public and private targets. Domestic public acquisitions result in negative announcement and post-acquisition returns, whilst cross-border public acquisitions result in zero announcement returns and negative post-acquisition returns. In contrast, both domestic and cross-border private acquisitions result in positive announcement returns and zero post-acquisition returns. The main differences between private and public acquisitions are that glamour acquirers underperform in public acquisitions but not in private acquisitions, and that acquirers using noncash methods of payment underperform in domestic public acquisitions but not in domestic private acquisitions. Overall, cross-border acquisitions result in lower announcement and long run returns than domestic acquisitions. In cross-border acquisitions, those involving high-tech firms perform relatively well, as do those with low national cultural differences.

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