Abstract
The paper examines cross-border takeovers through the lens of currency risk management. Using a sample of 152 large cross-border deals undertaken by listed French firms, the study document that, acquirers are firms with higher exposure to target currency prior to the takeover announcement. The value of the acquiring firm becomes less sensitive to the target currency following the transaction. Acquirer abnormal returns are also positively associated with a decrease in exposure to the target currency. The gain is economically substantial. For an acquirer worth €100 million in equity, a one-unit decrease in currency exposure leads to a euro gain of €1.68 million.
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