Crossing takeover premiums and mix of payment: Empirical test of contractual setting in M&A transactions
de La Bruslerie, Hubert (2011), Crossing takeover premiums and mix of payment: Empirical test of contractual setting in M&A transactions, 10ème Conférence Internationale de Gouvernance, 2011-05, Montréal, Canada
TypeCommunication / Conférence
Conference title10ème Conférence Internationale de Gouvernance
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Author(s)de La Bruslerie, Hubert
Abstract (EN)Analysis of the tender offer premiums and of the means of payment should not be done separately. In the empirical literature these two variables are often considered independently although they may have endogenous relation in a contractual setting. Using a sample of European M&As over the 2000-2010 decade, we show that these two variables are jointly set in a contractual empirical approach. The relationship between the percentage of cash and the offer premium is positive: higher premiums will yield payments with more cash. We highlight that the payment choice is not a continuum between full cash and full share payment. Two different regimes of payment in M&A transactions are empirically characterized. We analyze the major determinants of M&A terms when the offer premium and the means of payment are jointly set. The underlying rationale of asymmetry of information and risk sharing calculus is found significant in the setting of the agreement.
Subjects / KeywordsMeans of payment; Takeover premium; Contract setting; M&A
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