The purpose of this study is to develop a valuation framework for mergers and acquisitions by explicitly incorporating the synergy effect of mergers. Based on the real options approach, we introduce the upper and lower bounds of terms for an acquirer that makes a merger profitable to both the...

This study proposes a dynamic model of acquisitions made by means of exchange offers. The model incorporates the process of the takeover bid, ex-change of shares, and completion of a merger. The optimal strategies for relevant players are derived using a dynamic programming approach. Although...