A game-theoretic model for mergers and acquisitions

The corporate merger process is modelled as a bargaining game under certainty. The distribution of gains between target and acquiring companies that would be consistent with the Nash-Kalai axioms is determined in principle. An operational version of the resulting game-theoretic model is fitted to em...

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Bibliographic Details
Published inEuropean journal of operational research Vol. 59; no. 2; pp. 275 - 287
Main Authors van den Honert, Robin C., Stewart, Theodor J.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 10.06.1992
Elsevier
Elsevier Sequoia S.A
SeriesEuropean Journal of Operational Research
Subjects
Acquisitions & mergers
Applied sciences
Bargaining
bargaining solution
Exact sciences and technology
Firm modelling
Game theory
Manycompanies
Mergers and acquisitions
Nash-Kalai axioms
Operational research and scientific management
Operational research. Management science
Operations research
Statistical analysis
Utility functions
utility gains
Nash-Kalai axioms
utility gains
Mergers and acquisitions
bargaining solution
Parameter estimation
Bargaining
Two person game
Firm management
Acquisition
Modeling
Game theory
Cooperative game
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Summary:The corporate merger process is modelled as a bargaining game under certainty. The distribution of gains between target and acquiring companies that would be consistent with the Nash-Kalai axioms is determined in principle. An operational version of the resulting game-theoretic model is fitted to empirical results from 24 recent mergers of companies quoted on the Johannesburg Stock Exchange. The model is shown to have good predictive power within this set of data.
ISSN:0377-2217
1872-6860
DOI:10.1016/0377-2217(92)90141-U