The impact of large acquisitions on the share price and operating financial performance of acquiring companies listed on the JSE

摘要

A KPMG survey in London found that 53% of mergersand acquisitions destroy shareholder value (Brewis,2000). Andrade, Mitchell and Stafford (2001) state thattwo of the main objectives in corporate financeresearch are the measurement of value creation ordestruction through mergers and acquisitions, and howthis value creation or destruction is distributed betweenthe acquiring company and the target company.The aim of this research is to determine whether largeacquisitions, concluded in 2001, 2002 or 2003 addvalue to acquiring companies listed on the JSE Limited(“the JSE”). The researchers examined the share priceperformance of the acquiring company around theacquisition announcement date and the impact onoperating financial performance in the two yearssubsequent to the acquisition. These two most popularmeasures are used to provide a comprehensiveanalysis of the wealth effects of large acquisitions on asample of South African acquiring companies. Incontrast to the majority of international studies thatonly consider mergers and tender offers where boththe acquirer and the target are publicly traded, thisstudy considers all mergers and acquisitions,specifically including unlisted targets.