HOW DO TAKEOVERS CREATE SYNERGIES? EVIDENCE FROM FRANCE

Taher Hamza, Adnène Sghaier and Mohamed Firas Thraya
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Taher Hamza: IHEC, University of Carthage, VALLOREM Lab, Université d’Orléans, France
Adnène Sghaier: ISG, University of Sousse, Tunisia
Mohamed Firas Thraya: Poitiers School of Management, France

Studies in Business and Economics, 2016, vol. 11, issue 1, 54-72

Abstract: Based on bidder-target asymmetry, our study investigates the source of synergy gains derived from corporate takeovers and their specific contribution to bidder value creation. Prior researches have focused on the relevance of only one source of potential synergy. We find that French takeovers tend to create long-term operating and financial synergies. These two synergy components are positive and significant with a large contribution of the former. Furthermore, cutbacks in investment expenditures represent the most significant source of operating synergies, while post-acquisition market power is non-significant. Moreover, both total and operating synergies are higher in focused takeovers initiated by “value” as opposed to "glamour" bidders. Lastly, financial synergies are likely to arise from bidder leverage level and target relative size.

Keywords: takeovers; operating synergy; financial synergy; investment cutbacks (search for similar items in EconPapers)
Date: 2016
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