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Bidder-Specific Synergies and the Evolution of Acquirer Returns

Author

Listed:
  • Olivier Dessaint

    (INSEAD, F-77305 Fontainebleau Cedex, France; and CEPR, London EC1V 0DX, United Kingdom)

  • B. Espen Eckbo

    (Tuck School of Business, Dartmouth College, Hanover, New Hampshire 03755; and Norwegian School of Economics (NHH), 5045 Bergen, Norway; and ECGI, 1000 Brussels, Belgium)

  • Andrey Golubov

    (ECGI, 1000 Brussels, Belgium; and Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

Abstract

Largely constant average acquirer returns over the past four decades mask fundamental changes in the takeover market. Controlling for bidder composition, the common component of acquirer returns has increased by five percentage points relative to the 1980s. Offsetting this increase, the average bidder-specific component has declined. We propose a theory of bidder-specific synergies to help interpret these opposing trends. In our theory and in the data, acquirer returns increase with the extent to which synergies are unique to that bidder. The composition effect reflects bidder uniqueness. Overall, the evidence is consistent with rising merger synergies that have become less bidder specific.

Suggested Citation

  • Olivier Dessaint & B. Espen Eckbo & Andrey Golubov, 2025. "Bidder-Specific Synergies and the Evolution of Acquirer Returns," Management Science, INFORMS, vol. 71(2), pages 1391-1417, February.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:2:p:1391-1417
    DOI: 10.1287/mnsc.2022.02208
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