A measure of the synergy in mergers under a competitive market for corporate control

Chang, Philip

doi:10.1007/bf02306323

Cited by 8 publications

(4 citation statements)

References 6 publications

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“…The highest bid will successfully acquire the target firm. l"Chang [3] has developed a measure of anticipated synergy of mergers based on the same logic that anticipated synergy would be competed away in a competitive market for corporate control. The measure involves three potentially observable variables: the premium and market value, and replacement costs of the target firm.…”

Section: Capm With Multiproduct Cost Functionsmentioning

confidence: 99%

Economies of Scope, Synergy, and the Capm

Chang

1988

J of Financial Research

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Section: Capm With Multiproduct Cost Functionsmentioning

confidence: 99%

Economies of Scope, Synergy, and the Capm

Chang

1988

J of Financial Research

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“…It should be noted that a successful merger depends on the ability to measure the anticipated synergy of the proposed merger (cf. Chang, 1988).…”

Section: Introductionmentioning

confidence: 99%

Multi‐product supply chain horizontal network integration: models, theory, and computational results

Nagurney¹,

Woolley²,

Qiang³

2010

Int Trans Operational Res

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In this paper, we develop multi-product supply chain network models with explicit capacities, before and after their horizontal integration. In addition, we propose a measure, which allows one to quantify and assess, from a supply chain network perspective, the synergy benefits associated with the integration of multi-product firms through mergers/acquisitions. We utilize a system-optimization perspective for the model development and provide the variational inequality formulations, which are then utilized to propose a computational procedure which fully exploits the underlying network structure. We illustrate the theoretical and computational framework with numerical examples. This paper is a contribution to the literatures of supply chain integration and mergers and acquisitions.

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“…Although synergy expectations were collected from the above listed sources, there have been academic attempts to measure these synergies from other available data Chang (1988). for example proposes a method for calculating these anticipated synergies using three variables: the acquisition premium paid by the buying …rm, the market value, and the replacement costs of the target …rm.28 Although it has been shown that saving expectations often fall short, here they only imply merging parties'pre-merger expectations.29 Quarterly indices (for the corresponding quarter of the merger noti…cation) from the UK Retail Price Index (RPI) were used (published on www.statistics.gov.uk) for de ‡ation.…”

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confidence: 99%

The Determinants of Merger Litigation Strategies: An Empirical Analysis of EC Mergers

Ormosi

2010

SSRN Journal

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Mergers with anticompetitive effects can gain regulatory approval if they prove that the benefits of the merger outweigh the negative effects (efficiency defence), and/or if they offer to modify the merger transaction in a way that eliminates these adverse effects (merger remedy). Although these two merger control instruments have been analysed separately, little work has been dedicated to modelling merger litigation where both the provision of efficiency-related evidence and remedy-offers are at the merging firms discretion, which is the case for example in the EC. This paper is an attempt to fill the empirical part of this gap. Its novelty lies not only in empirically modelling the system of decisions that firms face in merger litigation but in using data from company reports on the merger-generated synergy expectations signalled to shareholders, which allows the direct empirical testing of some of the assumptions and findings from previous works. Evidence is presented that firms' own efficiency expectations do not have an impact on the probability of applying for efficiency defence; that pre-merger synergy expectations enhance the willingness to offer remedies; false efficiency claims can be distinguished by looking at the timing of the remedyoffer; and finally, the cost of delay plays a central role in designing firms' litigation strategy, especially when these costs exceed the cost of the remedy.

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A measure of the synergy in mergers under a competitive market for corporate control

Cited by 8 publications

References 6 publications

Economies of Scope, Synergy, and the Capm

Economies of Scope, Synergy, and the Capm

Multi‐product supply chain horizontal network integration: models, theory, and computational results

The Determinants of Merger Litigation Strategies: An Empirical Analysis of EC Mergers

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