Journal of Corporate Finance Vol. 40 2016
Bond tender offers in mergers and acquisitions
Abstract
We explore the motives and consequences of bond tender offers announced in connection with mergers and acquisitions (M&A). We find merging firms use bond tender offers strategically to renegotiate with bondholders to gain financial flexibility by reducing leverage and eliminating covenants, and to curtail the coinsurance benefits associated with M&A. Moreover, we find bondholder wealth effects depend not only on the bond's own characteristics, but also on the characteristics of its sibling bonds. Finally, the use of bond tender offers in M&A is associated with increased likelihood of deal consummation and lower acquisition premiums.
- DOI
- 10.1016/j.jcorpfin.2016.07.013
- Volume
- 40
- Pages
- 128-141
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib