Pre-Emptive Horizontal Mergers : Theory and Evidence

This paper proposes and tests an explanation as to why rational managers seeking to maximize shareholder value can pursue value-decreasing mergers. It can be optimal to overpay for a target firm and decrease shareholder value if the loss is less than in an alternative where the merger is undertaken by a product market rival. This paper presents a model based on synergies, market power and competition for merger targets. Consistent with the model the empirical results obtained here show a strong correlation between the returns of acquiring firms and close rivals around merger events

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Year of publication:	2007
Authors:	Molnar, Jozsef
Publisher:	[S.l.] : SSRN
Subject:	Theorie \| Theory \| Fusion \| Merger \| Oligopol \| Oligopoly \| Shareholder Value \| Shareholder value \| Auktion \| Auction \| Horizontale Integration \| Horizontal integration

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