The Impact of Hostile Takeovers on the Value of Shares of Acquiring Companies: Russian and European Practice

The aim of the study is to identify the market reaction in response to the announcements of Russian and European companies about hostile takeover deals.The first chapter presents a review of the existing academic literature in the field of assessing the impact of hostile takeovers on the value of shares of acquiring companies. The second chapter examines the existing empirical studies that represents the valuation of the shares of companies that have committed hostile takeovers. Until now, the authors have not come to an unambiguous opinion on this issue and the results of the work are rather contradictory.The third chapter presents the empirical results of the study. Data on Russian and European hostile and friendly takeover deals for 10 years from 2007 to 2017 were collected. The specific share of hostile takeovers in the total sample is 5.81% for Russian companies and 6.98% for European ones.The market reaction in response to the announcement of transactions reflects the indicator of the cumulative average excess return, and its significance is verified by the test of Patel and Corrado. Thus, the Russian and European markets react negatively on the announcing of hostile transactions, the negative effect is large for the Russian market compared to the European corporate control market. Also, by the method of event analysis, the positive impact of announcements on friendly transactions of Russian companies was revealed, the result confirmed the linear regression model.The goal of the research has been achieved: the market reacts negatively in response to the announcements of hostile takeover deals, the value of shares is collapsing for Russian and European companies. Therefore, shareholders of companies whose top management intends to make a hostile takeover should expect a drop in their wealth