Title: Determinants of premiums paid in European banking mergers and acquisitions

Authors: Belen Diaz Diaz, Sergio Sanfilippo Azofra

Addresses: Departamento de Administracion de Empresas, Universidad de Cantabria, Avda. de los Castros s/n, 39005 Santander, Spain. ' Departamento de Administracion de Empresas, Universidad de Cantabria, Avda. de los Castros s/n, 39005 Santander, Spain

Abstract: This study is aimed at analysing the determinants of premiums paid in European banking mergers and acquisitions (M&A). This analysis will highlight the reasons for the wave of bank M&A during the 1990s. The empirical study analyses a sample of 81 European banking M&A from 1994 to 2000. The results show that there are different variables that make the target bank attractive to the acquirer, such as the percentage of equity, the percentage of loans and financial profitability. However, geographical and product diversification have not been considered by the acquirers as a reason to pay higher premiums.

Keywords: premiums; Europe; banking; mergers and acquisitions; M&A; percentage of equity; percentage of loans; financial profitability; geographical diversification; product diversification.

DOI: 10.1504/IJBAAF.2009.023150

International Journal of Banking, Accounting and Finance, 2009 Vol.1 No.4, pp.358 - 380

Published online: 11 Feb 2009 *

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