Evaluation of Post-Merger Performance of Public Listed Companies in the UK

Abstract

Abstract-The objective of this study is to examine whether merger creates value for shareholders in short run. This study is based on a near-exhaustive sample of UK public listed companies during 1993 and 2000, total of 237 takeovers. The acquirers are UK based companies. Results show that merger and acquisitions do create value for target companies, and shareholders of acquiring firm earn negative abnormal returns. The results for short run Cumulative abnormal returns (CARs) indicate that the stocks market is inefficient. And under inefficient market, merger and acquisitions do create value for shareholders of bidders when the payment method is appropriately chosen.