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M&A Activity, Divestitures and Initial Public Offerings in the Fashion Industry


Steffen Meinshausen

This thesis analyzes four individual corporate finance-related research objectives on the fashion and leather accessories industry. The first two studies investigate the share price reactions of strategic bidder M&A transactions and their key drivers. The third study analyzes the implications of a missed disposal opportunity in the luxury fashion segment. Finally, the fourth study illustrates the long-term performance and changes in systematic risk exposure of initial public offerings in the fashion industry. The thesis contains a variety of empirical findings that are novel to the existing literary base of corporate finance research. It shows the various drivers of consolidation in a highly-dynamic and heterogeneous industry segment over the course of the last two decades.


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In this dissertation, we investigated four empirical corporate finance-related re- search questions and gave detailed insights on mergers and acquisitions, divesti- ture activities and initial public offerings in the fashion and leather accessories industry during the previous two decades. This final chapter summarizes our key findings, gives practical advice on upcoming finance activity in the fashion segment and outlines potential future research objectives. Chapter 2 illustrates the number, geographical and seasonal distribution as well as deal volumes of 192 M&A transactions in the apparel industry between 1994 and 2009. On average, capital market reactions to deal announcements are distinctively positive as bidding shareholders gain significant cumulative ab- normal returns in a short-term event window. When transaction- and acquirer- specific characteristics are accounted for in our cross-sectional regression analy- sis, M&A transactions of smaller fashion companies with high pre-merger profi- tability that make only few carefully selected acquisitions earn the highest ab- normal returns upon announcement. On the contrary, deals of larger, multi-brand firms with high takeover fre- quencies exert a significantly more negative influence on average CAR. The same applies to bull-market transactions as opposed to phases of low market valuations or recessions. It can therefore be further reasoned that equity inves- tors carefully evaluate transaction announcements in their investment decisions. M&A deals conducted by small fashion businesses for the purpose of reducing the high risk exposure that is inherent in the fast-paced apparel industry with its extremely short product life cycles significantly outperform large-scale transac- tions...

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