Large mergers and acquisitions of European brewing groups—event study evidence on value creation

Abstract

Executive SummaryThe importance of mergers and acquisitions~M&As! as strategies for achieving international market shares is evidenced by the increasing number of such activities in recent years+ Even the brewing sector is becoming a global market now, governed by crossborder takeovers and growth through acquisitions+ Whether a merger or acquisition in the brewing industry will in fact have a positive impact on shareholder wealth will be analyzed by applying advanced event study methodology+The basic assumption underlying the use of stock market data to estimate the effects of M&As is that share prices reflect expectations about future profit and dividend streams+ The primary data employed in this article are daily stock returns of five European brewing groups, which announced 31 M&As during the sample period from March 2000 through August 2005+The results of this study provide empirical evidence on both significant differences regarding the peer group members' level of acquisitioning and their impact on several brewers' financial performance as expressed in increasing or decreasing stock prices+ Some investor reactions were broadly negative, reflecting overpriced deals+ But unlike the results of event studies on other industries, no overall significant negative response to M&As has been observed in the brewing industry despite some negative outliers+ Obviously, it is paramount in the brewing industry to make the right deals to enhance shareholders' value+ This result is underpinned by the comparison of the performance of companies that experienced M&As and of companies that did not+ However, there remains one unanswered question: When will the brewing scene witness large-scale deals due to mergers within the top ten?1 Corresponding author+

Managerial Risk‐taking in International Acquisitions in the Brewery Industry: Institutional and Ownership Influences Compared

“…In addition to numerous newspaper and magazine articles covering strategic and organizational issues on the four firms studied, selected information from the companies (mostly annual reports; see also reference list) as well as from secondary sources (e.g. Dieng, Dörrenbächer and Gammelgaard, ; Ebneth and Theuvsen, ; Elshof, ) was included.…”

Introduction

“…A comparative study by Geppert et al (forthcoming) shows that family-owned firms from small, coordinated market economies (such as Heineken from the Netherlands, Carlsberg of Denmark and Interbrew of Belgium), which are backed by comparatively long traditions of international activities, show less risky and more sustainable international growth than publicly-owned firms from large home markets. The latter firms, which by nature of their large home markets often lack international experience, have engaged in precipitous catch-up internationalization strategies in response to pressure from the stock markets (as Taplin et Furthermore, the brewery industry has experienced numerous smalland medium-sized cross-border acquisitions in recent decades (Ebneth and Theuvsen 2007). Heineken, the most active company in this respect (Madsen et al 2011), acquired no fewer than 35 smaller breweries around the world between 1990 and 2008 (Dieng et al 2009; for more information, see Dörrenbächer and Zaby, Chapter 8, this volume).…”

Debt Risk Evaluation of Toll Freeways in Mainland China Using the Grey Approach

“…It is equal to earnings before interest, tax, depreciation and, amortization divided by total revenue. Because EBITDA excludes interest, depreciation, amortization, and taxes, EBITDA margin can provide a clear view of toll freeways' operating profitability [54][55][56][57].…”