Abstract/Details

Asset exchanges as a restructuring strategy: Motives and valuation effects


1992 1992

Other formats: Order a copy

Abstract (summary)

This study examines restructuring in which, (i) two firms exchange operating units (asset-for-asset exchanges), and (ii) a firm divests assets in exchange for an equity stake in the firm acquiring the assets (asset-for-stock exchanges). These transactions are called asset exchanges, as distinct from divestitures primarily for cash. Since liquidity is not the primary consideration, asset exchanges are more suitable than sales of assets for cash when examining the role of synergy in the divestiture decision. An asset-for-stock exchange is similar to a partial merger and creates an alternative form of cooperative strategy and organization to mergers and joint ventures.

We do not find evidence of gains to firms in asset-for-asset exchanges. While portfolios of divestors and acquirers in asset-for-stock exchanges gain, an analysis of matched pairs of firms in each transaction reveals that both firms gain only in a third of all cases. Overall, an asset-for-stock exchange leads to an increase in the combined value of the divestor and the acquirer. The gains in dollar value terms are fairly large relative to the gains in takeovers. The sharing of gains is related to the percentage of stock acquired, appointment by the divestor of directors on the acquirer's board, voting restrictions on stock, the use of cash as a part of the consideration and the financial condition of the divested unit.

The results of this study suggest that returns to firms undertaking asset exchanges cannot be explained by synergistic motives alone and indicates a need to examine other possible motives in asset exchanges as well as in other forms of divestitures.

Indexing (details)


Subject
Finance;
Business community;
Management
Classification
0508: Finance
0310: Business community
0454: Management
Identifier / keyword
Social sciences, corporate reorganization
Title
Asset exchanges as a restructuring strategy: Motives and valuation effects
Author
Nanda, Sudhir
Number of pages
175
Publication year
1992
Degree date
1992
School code
0118
Source
DAI-A 53/10, Dissertation Abstracts International
Place of publication
Ann Arbor
Country of publication
United States
Advisor
Owers, James E.
University/institution
University of Massachusetts Amherst
University location
United States -- Massachusetts
Degree
Ph.D.
Source type
Dissertations & Theses
Language
English
Document type
Dissertation/Thesis
Dissertation/thesis number
9305873
ProQuest document ID
304033918
Copyright
Database copyright ProQuest LLC; ProQuest does not claim copyright in the individual underlying works.
Document URL
http://search.proquest.com/docview/304033918
Access the complete full text

You can get the full text of this document if it is part of your institution's ProQuest subscription.

Try one of the following:

  • Connect to ProQuest through your library network and search for the document from there.
  • Request the document from your library.
  • Go to the ProQuest login page and enter a ProQuest or My Research username / password.