It's likely that each time deep-pocketed Lucent Technologies, JDS Uniphase Corp. or Corning Inc. buys a supplier, other companies benefit. A new study explains why more than half of the business rivals of a company targeted for acquisition typically experience a jump in market value. He and Moon H. Song of San Diego State University studied 141 companies that were takeover targets from 1982 to 1991, and 2459 rival firms in the same industries.
Companies are worth more if a bidder has an alternate use.
The study also showed that the market often anticipates a takeover with a wholesale run-up of stock prices across an industry. Factors that influence whether a rival company is the next target include its size, level of management ownership and debt capacity, he said. Laurin Publishing Co. Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.