createdvalueforthecombinedfirm, 30 percentwere
value neutral, and 53 percent destroyed value.
21
- MoellerandSchlingemann(2004)brokedown4,430
acquisitionsbetween 1985 and 1995 intocross-border
and domestic acquisitions and conclude that U.S.
acquirersoverpaymoreincross-borderacquisitions
and have lower stock price and operating
performance in the postacquisition period. They
attributethistoacquirersoverestimatingthevalueof
synergyin cross-bordermergersorunderestimating
the difficulty of delivering this synergy.
22
- A study
23 lookedattheeightlargestbankmergersin 1995
andconcludedthatonlytwo(Chase/Chemical,First
Chicago/NBD) subsequently outperformed the
bank-stock index. The largest, Wells Fargo’s
acquisition of First Interstate, was a significant
failure. Sirower(1996)takesa detailedlook atthe
promises and failures of synergy and draws the
gloomyconclusionthatsynergyisoftenpromisedbut
seldom delivered.
24
- Themostdamagingpieceofevidenceontheoutcome
of acquisitions is the large numberof acquisitions
that are reversed within fairly short time periods.
MitchellandLehn(1990)notethat20.2percent of
theacquisitionsmadebetween 1982 and 1986 were
divested by 1988.
25 Studiesthathavetrackedacquisitionsforlonger
timeperiods(10yearsormore)havefoundthatthe
divestiture rate of acquisitions rises to almost 50
