Abstract
This paper analyzes the merger between Bradesco and HSBC through the event studies. Eckbo (1983) argues that anti-competitive mergers benefit not only merging firms, but also their rivals, since a less competitive environment also favors them. Therefore, a merger will be anti-competitive if there is an increase in the rival firms’ stock prices. On the other hand, if the market expects that a given merger will produce significant efficiency gains, a decrease in the rival firms’ stock prices would be observed. The analysis by event study was based on daily quotations and market value from the rivals firms. The results indicate a positive impact of the merger on the value of the rivals, so the merger can be considered as anticompetitive. Therefore, the CADE’s decision to approve the merger was inconsistent with the results obtained by the methodology.Key words: Merger evaluation, Event Studies, Competitive effects.
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