Takeovers and shareholder returns in the retail industry
Acquisition activity is one well-established growth mechanism in the retail sector. Between 1982 and 1996 over a thousand retail takeovers involving British companies are recorded. This paper seeks to apply approaches developed in the finance literature to the retail sector in order to measure the impact of this activity on shareholder returns. Based on a sample of 227 takeovers, which accounted for two-thirds of the value of activity over the 1982–96 period, this study reports that, while in general terms retail takeover activity appears to provide shareholder returns similar to those observed in other studies, namely bidders show above-average returns pre-bid but below-average returns post-bid, some difference from other studies exists. First, the method of payment (cash or equity) shows similar negative returns in the post-bid period, and second takeovers of previously independent firms show lower negative returns than acquisition of subsidiaries of other companies.