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This thesis explores the impact of mergers and acquisitions (M&A) on the stock prices of both target and acquiring companies, providing an in-depth analysis of market reactions to these corporate events. M&A transactions frequently result in notable movements in stock prices, reflecting investor sentiment regarding potential synergies, growth, and market consolidation. Notably, target companies often see a substantial rise in stock price, with an average abnormal return of 19.44% within a three-day event window surrounding the announcement.
The study addresses critical questions, such as the initial drivers of stock price reactions, their long-term effects on corporate success, and the insights investors can draw from past M&A activities to inform future decisions. Early chapters outline the M&A landscape, highlighting factors influencing market reactions, such as deal structure, company size, industry context, and strategic intent.
Employing an event-study methodology, this research analyzes stock price patterns across a sample of M&A transactions to assess both short-term reactions and long-term outcomes, including synergies and post-merger integration success. Additionally, case studies of notable M&A deals offer practical insights into the dynamics of market responses. The thesis also reviews theories and empirical findings on market reactions to M&A announcements, providing a comprehensive framework for understanding these phenomena.
In its final section, this thesis offers valuable insights into how M&A transactions affect stock prices, serving as a resource for financial analysts, strategists, and investors seeking to capitalize on these significant market events.
