Netter, in theirexamination of tender offersfrom 1962 to
1985,noteadeclineinreturnstobiddingfirmstockholders
from4.4percentinthe1960sto 2 percentinthe1970sto−1
percent in the 1980s. Other studies indicate that
approximatelyhalfofallbiddingfirmsearnnegativereturns
around the announcement of takeovers, suggesting that
shareholdersareskepticalabouttheperceivedvalueof the
takeoverinasignificantnumberofcases.Inthemostrecent
study,Moeller,Schlingemann,andStulz(2004)estimatethat
stockholdersinacquiringfirmslost 12 centsperdollarspent
onacquisitionsbetween 1998 and2001,translatingintoaloss
of$240billionovertheperiod.Incontrast,theylostonly$7
billioncollectivelythroughtheentire1980s.However,almost
all of thelost shareholder wealth between 1998 and 2001
could be attributed to a few very large deals, where the
acquiring firm overpaid (like the Time Warner/AOL deal).
32
Asafinalpoint,itisworthnotingthatitmaybesimplisticto
lookatthebehaviorofacquiringandtargetfirmstockprice
ontheacquisitionannouncementdaytogetameasureofthe
valueofsynergyandwhetherbiddersareoverpaying.After
all, most acquisition announcements are not complete
surprisesandthemarkethasoftenimpoundeditsexpectations
intothestock price.Hietala,Kaplan,and Robinson (2000)
developanapproachthatconsidersstockpricemovementsfor
thetarget firmandmultiplebiddingfirms from thetimea
mergerisannouncedtowhenitisconsummatedtobackout
the value of synergy and the extent of underpayment or
overpayment by the acquiring firm.
33 Usingthisapproach,theyconcludethatViacomoverpaid
by$1.5billionwhenitboughtParamountin 1994 and that