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Value Creation within the Construction Industry

A Study of Strategic Takeovers

Series:

Joachim Vogt

Mergers & Acquisitions (M&A) are important strategic business options for corporations. Yet, the understanding of industry-specific drivers of M&A transactions is more than limited. Characterized by highly fragmented markets, cross-company production structures and increasing international business scope, the construction industry represents an attractive field of research to address questions on M&A motives. Based on comprehensively selected datasets and state-of-the-art empirical methods, the study illustrates the motives, the strategy and the effects of M&A transaction within the construction industry. Overall the analyzed M&A transactions tend to lead to an increase of corporate wealth. Important factors for a positive development comprise the peculiarities of the construction industry, the general market conditions and the nature of many takeovers. Still, the M&A transactions may also cause significant value destruction and may even lead to a failure of a company if an inappropriate strategy is applied.

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List of Tables XIII

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XIII List of Tables Table 2.1: Sample Overview............................................................................ 14 Table 2.2: CAAR of All Bidders ..................................................................... 17 Table 2.3: CAAR of Construction Firms and Non-Construction Firms ......... 18 Table 2.4: CAAR of Horizontal, Vertical and Conglomerate Takeovers by Construction Firms .................................................................... 20 Table 2.5: Detailed CAAR Analysis of Takeovers by Non-Construction Firms ............................................................................................... 21 Table 2.6: CAAR of Vertical and Conglomerate Takeovers by Non-Construction Firms ................................................................ 22 Table 2.7: CAAR of Financial Investments and Financial Difficulties .......... 24 Table 2.8: CAAR of Domestic and International Takeovers .......................... 26 Table 2.9: Detailed CAAR Analysis of Domestic Takeovers ......................... 27 Table 2.10: CAAR of Domestic and International Takeovers by Construction Firms ......................................................................... 28 Table 2.11: CAAR of Domestic and International Takeovers by Non-Construction Firms ................................................................. 29 Table 2.12: CAAR at Different Time Periods ................................................... 30 Table 2.13: Short-Term Regression Results ...................................................... 33 Table 3.1: Sample Overview of Construction Firms as Bidders ..................... 42 Table 3.2: Sample Overview of Non-Construction Firms as Bidders............. 43 Table 3.3: BHAR of Construction Firms and Non-Construction Firms ......... 47 Table 3.4: BHAR of Horizontal, Vertical and Conglomerate Takeovers by Construction Firms .................................................................... 49 Table 3.5: BHAR of Vertical and Conglomerate Takeovers by Non-Construction Firms ................................................................. 52 XIV Table 3.6: BHAR of Investment and Financial Difficulty Takeovers by Non-Construction Firms ............................................................... 523 Table 3.7: BHAR of International and Domestic Takeovers by Construction Firms ......................................................................... 55 Table 3.8: BHAR of International and Domestic Takeovers by Non-Construction Firms ................................................................. 56 Table 3.9: Detailed BHAR Analysis of Domestic Takeovers by Construction Firms ......................................................................... 57 Table 3.10: Detailed BHAR Analysis of Domestic Takeovers by Non-Construction Firms ................................................................. 58 Table 3.11: Long-Term Regression Results...

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