Post-acquisition Returns Research Articles

Acquiring Biopharmaceutical Research: Is Market Approval a Deal Breaker?☆

This paper empirically investigates the profit impact of externally sourcing technology through acquisition. Specifically, it questions whether biopharmaceutical acquirers benefit from taking over technologies which are pre-marketed more than those that have already been approved for market. This paper utilizes the resource-based view to determine that the decision depends on the relative value chains of the acquirer and target. We assert that companies with lower research and development (R&D) intensity than their targets benefit from acquisitions of pre-marketed drugs more than they would with marketed drugs because of a complementary combination of competitive assets. Estimations from the U.S. biopharmaceutical sector in the 1990s show that acquirers that take over pre-marketed drugs from targets with higher R&D intensity than themselves have post-acquisition returns between 2% and 11% higher than if they took over marketed drugs.

Do Long-Term Shareholders Benefit From Corporate Acquisitions?

Using 947 acquisitions during 1970-1989, this paper finds a relationship between the post-acquisition returns and the mode of acquisition and form of payment. During a five-year period following the acquisition, on average, firms that complete stock mergers earn significantly negative excess returns of -25.0 percent whereas firms that complete cash tender offers earn significantly positive excess returns of 61.7 percent. Over the combined pre- and post-acquisition period, target shareholders do not earn significantly positive excess returns in stock mergers. In the top quartile of target to acquirer size ratio, target shareholders earn negative excess returns in stock mergers.