Value Creation in M&As in Sweden - Is the Stock Market Able to Predict Customer Reactions?

Sammanfattning: Title: Value Creation in M&As in Sweden - Is the Stock Market able to Predict Customer Reactions? Seminar date: 2011-05-31 Course: BUSM36, Degree Project Master level in Corporate and Financial Management, Business Administration Master level, 15 University Credit Points (15 ECTS) Authors: Besnike Bahtiri and Ammeli Stigborn Advisor: Rikard Larsson Five key words: M&As, Sweden, customer reactions, post-acquisition share price, event study. Purpose: This study evaluates whether the stock market is able to predict the post-acquisition reactions of the business market (customers). Methodology: Quantitative method combined with an event study, using multiple regression analysis. Theoretical Perspectives: Our hypotheses are mainly based on theory regarding stock market and business market reactions following M&As. Moreover, we cover combination potential, cross-border M&As, relative size and acquisition experience. Lastly, we theorize the connection between stock market reactions versus business market reactions to every explanatory variable. Empirical foundation: 176 M&As that occurred between 1990 and 2007 and where the acquiring firm is Swedish. Conclusions: We are not able to prove that the stock market is able to predict the actions of customers; however, we recognize some relationships and trends regarding share price changes versus combination potential and M&A experience. Moreover, we also illustrate that there seems to be a trend between customer reactions and combination potential, cross-border M&As versus M&A experience.