The timing and terms in mergers and acquisitions motivated by economies of scale and risk diversification
by Yuanbin Wang
International Journal of Information and Decision Sciences (IJIDS), Vol. 6, No. 3, 2014

Abstract: In this paper, we analyse the mergers and acquisitions motivated by economies of scale and risk diversification via real option approach. The model shows that the bidder and the target firm simultaneously exercise their own exchange options when the ratio of two product prices reaches either the lower threshold from below or the higher threshold from above, and the shares of two firms in the post-merger firm are determined endogenously.

Online publication date: Wed, 10-Sep-2014

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