M&A Performance in Technology Industry

The purpose of this diploma work is to evaluate the effect of Technology sector M&A deals on the stock prices of the acquiring and the acquired firms. The object of the research are the largest deals valued at 1 billion US dollars and greater. The deals considered belong to the 7th wave of mergers and acquisitions started in 2014 year. Therefore, all the suitable 2015 and 2016 deals were collected into a sample. The general problem considered is the presence of the abnormal returns around the announcement date of the event and the deal proceeding day. Methodology of the abnormal returns, average abnormal returns and cumulative abnormal returns was utilized. The historical data was used for the regressions calculation for the stocks prices expected returns prediction. The anomalies of the acquirers’ positive short-term gains and no changes in the long-term period were received as the results of the analysis. Furthermore, the target firms are significantly rising in value due to the M&A deals from both, the short-term and the long-term perspective. In addition, the deal size effect was considered as the possible driving factor for the wealth increase. The results show that the targets’ abnormal returns are positively correlated with the deal value while this effect is not strongly influencing the acquiring firms. The knowledge sharing degree, cultural similarities, the M&A experience of the acquiring party were proposed as the possible explanations for these anomalies. Therefore, the target’s stock prices are more predictable than the acquirer’s regarding the effect of the M&A deals on returns. The diploma paper conclusions are consistent with the prior research. Though, the highly volatile abnormal returns of the acquiring firms are the subject for the further academic research on the possible driving factors.