Hostile takeovers an investment performance of acquirers and targets

Mergers and acquisitions (M&A) can be either hostile or friendly in nature.This study looks at the corresponding long-term investment performance ofhostile and friendly takeovers within the mining sector, pre and post thetakeover of targets, with the aim to investigate whether there are statisticallysignificant differences about which the investor community should be aware. 36 months of monthly share price performance, pre and post first formalmerger/takeover announcement date, are studied, for each acquirer iscompared with the bourse mining index to calculate the percentage time theacquirer outperforms the market (mining index). Research of the major miningstock exchanges of the world New York, Toronto, Australia, London andJohannesburg reveals that the investment performances of hostile acquiringmining companies, pre first formal announcement date, are statisticallysignificantly greater than post first formal announcement date. No statisticallysignificant difference was found pre and post first announcement date forfriendly acquiring mining companies. Although clear differences in post firstformal announcement date investment performance are noted between hostileacquirers and friendly acquirers, there is no statistically significant differencebetween the investment performances of friendly versus hostile acquirers. Copyright © 2006 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria Please cite as follows: Hansen, A 2006, Hostile takeovers and investment performance of acquirers and targets, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-03302010-143733/ > G10/235/ag