Abnormal return prior to tender offers on the Swedish Stock Market

Abstract: For this paper 236 tender offers on Swedish listed companies have been studied. The purpose was primarily to investigate abnormal return for the target companies between 1997 and 2009. We believe that that there are three main factors affecting the abnormal return: leakage of information that reach some institutions or individuals but not the whole market, pure market speculation and rumors that are available to the whole market. An analysis was made on variables that could explain leakage before a public announcement of a merger or an acquisition. With the results conclusions were made that significant abnormal returns can be observed for pre bid run-ups in the Swedish Stock Market. Since evidence could not been found for illegal insider trading and media speculation could not explain the abnormal returns, the conclusions of this study is that the abnormal returns are due to a combination of leakage affected by insider information and pure market speculations.