The effects of tender offers on target firms’ market value: case Sweden

Abstract: Purpose: Investigate to what extent tender offers have created value for shareholders of target firms on the Swedish stock market and if there are any relationship between specific variables and the targets’ abnormal returns. Methodology: The event study methodology and cross sectional regression analysis. Theoretical perspectives: The efficient market hypothesis is the starting point in our thesis followed by theory concerning determinants of abnormal returns for target firms. Empirical foundation: Tender offers during 1999-2010 on Swedish public companies. Conclusions: We find that target shareholders gain approximately 15 percent abnormal returns around the days of the announcement. Further, we find that the two of the variables, Tobin’s Q and stock price run-up, significantly affect the target announcement return.