|Takeover premium puzzles : evidence from stocks listed in Hong Kong
|Wei, Steven (AF)
|Consolidation and merger of corporations
Tender offers (Securities)
Stocks -- China -- Hong Kong
Hong Kong Polytechnic University -- Dissertations
|Faculty of Business
|i, 91 pages : illustrations
|By collecting and examining a sample of 1,309 acquisition transactions for the shares of listed companies in Hong Kong, I find that the Chinese State-owned Enterprise (SOE) background of buyers, the multi-market listed status of targets, and the degree of control rights obtained through the deals have impacts on takeover premium, which also show unique patterns or "puzzles" in the Hong Kong market. For instance, as an influential and active group of acquirers in the market, SOEs tend to pay lower takeover premium in acquisition transactions for the shares of listed targets compared to non-SOEs. Similarly, buyers (both SOEs and non-SOEs) are only willing to afford a lower premium if they gain absolute control over targets after the deals, whereas this effect is insignificant if buyers can only gain control rather than absolute control. Furthermore, buyers will also likely pay a lower premium for a multi-market listed target.
However, all the above "puzzles" in acquisitions do not jeopardize the rationale of buyers' paying a high premium as there exists a positive link between takeover premium and the post-deal performance of targets.
Since the acquisition market in Hong Kong possesses certain features, such as large trading volume for stocks, the existence of "shell price", etc., my findings complement the existing M&A studies on this market by successfully linking the SOE/non-SOE background of buyers, the degree of control rights and the multi-market listed status of targets with takeover premium. In addition, my empirical results also have specific policy implications for the assessment mechanism for SOEs and the codes or rules for supervising such acquisitions.
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