Merger & Acquisition: an analysis of main factors and Covid 19 effects on takeover premium

The thesis has the object of introducing the reader to the market of firms through a synthesis of the main literature and a statistical analysis on the factors which influence the market premium in a M&A operation. The literature on this subject is very large and includes many factors in the ones affecting the takeover premium. The factors listed range from the type of operations to the relative size of the actors and many others. In the thesis many of these factors will be considered and the degree with which they influence the takeover premium will be evaluated. Moreover, the effects of Covid 19 pandemic are analyzed to understand whether it has a significant influence on the M&A premium. In order to deliver what said before, an empirical analysis on a M&A operations sample is presented to refute or confirm the main literature on takeover premium affecting factors. The mentioned empirical analysis consists in a multi-factor regression which will highlight the most significant variables affecting the takeover premium. The multi-factor regression is a statistic model based on a dependent factor and multiple independent ones, also called explanatory variables. The model is used to predict the behavior of the dependent variable through the values of the independent variables and their coefficients. The experimental error of the model is represented by the so-called residuals. During the analysis, the Covid 19 outbreak effects will be taken into consideration by looking both to operations occurred before and during the pandemic. Finally, the conclusions from the empirical analysis indicate that the significative factors influencing the takeover premium are the run-up in the target stock price before the announcement date, the presence of a financial acquirer in the transaction, the cash percentage in the takeover offer and the deal size. Indeed, the analysis shows that all the mentioned factors have a positive relation with the takeover premium paid to the target companies. However, the empirical model still shows a low level of variance explained by the model, witnessed by the low value of the adjusted r-squared index. Since the research area of takeover premiums affecting factors is still very wide, more factors could be introduced to the model in order to increase the variance explained by the model improving the model itself.