DO TRADE SALE PRIVATIZATIONS IN EUROPE CREATE VALUE TO SHAREHOLDERS OF ACQUIRING FIRMS?

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Abstract

Many authors have identified zero to negative announcement returns for acquirers in traditional mergers and acquisitions. When purchasing state-owned enterprises as compared to public assets the acquirer faces one particular difference: the distinct characteristics of the seller. The selling government is assumed to lack bargaining power and experience selling off its assets and also often to consider non-economic objectives when privatizing. Furthermore it has a tendency to privilege domestic acquirers. By conducting standard event study methodology and analyzing 90 European trade-sale privatizations we document that acquirers in a privatization context yield significant positive abnormal stock returns.

Keywords: Mergers and Acquisitions, Privatization, Event Study, Acquirer

How to cite this paper: Zeidler, F., & Schiereck, D. (2007). Do trade sale privatizations in Europe create value to shareholders of acquiring firms?Corporate Ownership & Control, 4(4-2), 262-274. https://doi.org/10.22495/cocv4i4c2p2