tender offers are slightly higher than the premiums in
mergers.Figure 15.4, extracted from one study,
31 provides an illustration of the magnitude of the
differences.
FIGURE 15.4Target Firm Premiums in Acquisitions
Source:Huang and Walkling (1987).
Nomatterhowyou categorizeacquisitions,stockholdersin
target firmshavelittle reasonto complainsincetheywalk
away with healthy price gains.
Theeffectoftakeoverannouncementsonbidderfirmstock
pricesisnotasclear-cutasitisfortargetfirms.Inthestudy
referencedearlier,JensenandRubackreportexcessreturnsof
4 percentforbiddingfirmstockholdersaroundtenderoffers
andnoexcessreturnsaroundmergers.Jarrell,Brickley,and