Private information implications for acquirers and targets in horizontal mergers

Mittal, Amit and Garg, Ajay Kumar (2017): Private information implications for acquirers and targets in horizontal mergers.

Abstract

The paper presents a robust theory centered in Private information to assuage event study literature and confirm with Acquirer gains in Bank M&A. The ability of larger firms lies in investments in Intellectual capital, harnessing soft information and critically, purloin value in the deal through bargaining based on its own and the Target’s specific Private information. Recent literature has affirmed that private targets within the core industry generate Positive returns for acquirers, realizing the value of Private information through deal making. Recent evidence from large Bank mergers producing large Bidder gains and the robust theory of private information presented herein is likely to renew confidence in the merger and acquisitions strategy and deflect from theoretic literature relying on earlier analysis reflecting on event studies as a tool and on the effectiveness of M&A strategies for these acquirers based in limited gains in the Event study literature. The paper presents theoretic models centered around private information of both acquirer and targets and defend a robust theory supporting the large impact strategy of Mergers evidenced in Horizontal mergers in line with recent literature. As evidence, the paper utilizes the Private information construct to explain intuitive results verified in the literature Banking markets present a unique opportunity in robustly recreating results based on this theory especially in growth memes presented by Asian markets. Foreign portfolio exits are significant opportunity losses for Global players and may not be justified by myopic short term responses to a new policy superstructure.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mergers and Acquisitions, Corporate Governance, Private Information, Asia, India, growth, Information asymmetry, Horizontal mergers
• Subjects: G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading; G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance

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