Bidders Get Four Times as Much as Targets of M&A Synergies in Domestic Japanese Deals

Author : Tarcisio B. da Graca

Abstract :In line with recent and growing research, this paper provides strong statistical evidence indicating that yen M&A synergies are distributed in favor of bidders’ stockholders at a 4-to-1 ratio in a sample of domestic deals in Japan from 2009 to 2020. The analysis uses pairs of deal parties and their yen abnormal returns to estimate the sharing of yen synergies directly. However, preliminary tests of the percent abnormal returns for each party align with the "received wisdom," showing that bidders’ percent abnormal returns are not statistically significant while targets’ percent abnormal returns are positive. The shift in conclusions arises from applying the share methodology, which is technically and data-wise less demanding than other recent methods that have challenged the received wisdom. The proposed share methodology effectively addresses the yen synergy distribution issue and could redefine a longstanding benchmark in the M&A literature, establishing a new paradigm.

Keywords :Mergers, Acquisitions, Synergies.

Conference Name :International Conference on Asian Political and Economical Studies (ICAPES -25)

Conference Place Toronto, Canada

Conference Date 7th Jan 2025