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Merging One's Way to the Top: AB Inbev versus Heineken

Author

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  • Doan, Minh Phuong
  • Sercu, Piet

Abstract

Leuven's Den Hoorn brewery, now AB Inbev SA, has become the world's largest brewing group by far, but critics say the company overpaid for its acquisitions. In this article, we study typical stock market reactions to the many takeover announcements by AB Inbev and the industry's runner-up, Heineken. Unlike Heineken's, the market leader's takeover announcements were met by, on average, a –2% price reaction in the stock market in the announcement month, but most of that is already undone in the next month. For Heineken, the same pattern shows up, only faster: the V-shaped reaction takes a few weeks rather than a few months. Such V-reactions may actually reflect a temporary rise in uncertainty rather than overpaying. The finding that reactions are reversed and heterogeneous across firms, raises issues of interpretation and optimal test design of event studies. (JEL Classifications: G12, G14, G17)

Suggested Citation

  • Doan, Minh Phuong & Sercu, Piet, 2021. "Merging One's Way to the Top: AB Inbev versus Heineken," Journal of Wine Economics, Cambridge University Press, vol. 16(1), pages 32-55, February.
    • Handle: RePEc:cup:jwecon:v:16:y:2021:i:1:p:32-55_3
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    Citations

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    Cited by:

    1. Cole, Matthew T. & McCullough, Michael, 2023. "California beer price posting: An exploratory analysis of pricing along the supply chain," Journal of Wine Economics, Cambridge University Press, vol. 18(3), pages 205-225, August.
    2. Doan, Minh Phuong & Sercu, Piet, 2021. "Modelling multiperiod patterns in stock-market reactions to events, with an application to serial acquisitions," International Review of Financial Analysis, Elsevier, vol. 77(C).

    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation

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