Acquirers' and Targets' Stockholders Equally Share M&A Value: Evidence from Pairs of Firms in Australian Deals

Abstract

How do the parties’ stockholders share the dollar M&A synergies as perceived by the stock market reactions upon the deals’ announcements? Consistent with a recent and mounting body of the literature, this paper reports robust statistical evidence that M&A dollar synergies are equally shared between acquirers’ and targets’ stockholders in a sample of domestic deals in Australia over the period 2013-2020. Strikingly, however, testing separately the parties' corresponding percent abnormal returns, preliminary results are consistent with the "received wisdom", i.e., the acquirers’ percent abnormal returns are not statistically different from zero while the targets’ percent abnormal returns are statistically positive. The reversal of conclusion emerges from the application of the share methodology that uses a much less demanding approach in terms of technical and data intensity requirements than acclaimed approaches that have recently challenged the received wisdom.