Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/218004 
Year of Publication: 
1988
Citation: 
[Journal:] South African Journal of Business Management [ISSN:] 2078-5976 [Volume:] 19 [Issue:] 4 [Publisher:] African Online Scientific Information Systems (AOSIS) [Place:] Cape Town [Year:] 1988 [Pages:] 155-160
Publisher: 
African Online Scientific Information Systems (AOSIS), Cape Town
Abstract: 
In this paper both the premium paid on acquisition during a merger as well as the method by which the target companies stockholders are paid for their holding are examined. The results indicate that in the South African (S.A.) context the average premium paid on acquisition is of the order of 30-40% which is approximately the same as that paid on other major exchanges. Efforts to determine those accounting and market-related variables which were highly correlated with the premium on acquisition were relatively unsuccessful with only the price/ earnings ratio (and, to a lesser extent relative size) being significantly correlated with the premium. In both cases, the correlations were positive, indicating that a higher P/E ratio in the target company and/or a target company which is large relative to the acquirer will result in a higher premium on acquisition. Finally, the results indicate that a cash payment remains the most popular method of payment in South African mergers, followed by an equity swap. These results appear to be time independent.
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.