Antitrust legislation in the M&A field and the effects of transaction announcements on stakeholders’ wealth: an empirical analysis for European Banks.

Abstract

Starting from the last decades of the past century, a rising trend in both number and magnitude was observed by researchers with respect to the occurrence of Mergers and Acquisitions in the European financial sector. It became quickly evident that a study relative to the economic consequences of those events was needed, and while in the United States plenty of them were carried out, in Europe the performed researches were quite low in number. The present paper tries therefore to work out an analysis addressing this topic. Besides this, an introductory digression relative to European legislation on M&As has been presented, with particular regard on the notification procedure and on the Antitrust supervision enforced by Regulation 139/2004 and by the TEU and TFEU respectively. The following part of the study tries instead to analyze in a quantitative way the effects that both shareholders and bondholders face if a transaction is approved by the competent authority. In order to do that, a methodology involving Abnormal Returns and Cumulative Abnormal Returns has been applied on both stock and credit default swap prices. The results obtained in the former case are basically in line with previous academic conclusions since they generally display positive abnormal returns for acquirers and negative returns for targets. In the latter case instead, no evidence of common and predictable results has been observed. To conclude, it might be interesting for future research purposes in this field to investigate all the economic features that might affect the perception of the event for both the groups of considered stakeholders.