Think of any two mergers or acquisitions currently in the news. These deals must have been announced within the past one year. Is each deal a horizontal merger or a vertical merger? Explain. Is each deal a long form or a short form merger? Explain. What do you think are the motivations for each of these transactions? Give specific details and cite sources for full points. Calculate the abnormal stock return on the announcement date for the bidder and the target in each deal. What do you think explains the stock price response?
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One of the biggest mergers in 2013 was witnessed in the airline industry in which American Airlines had merged with US Airways. The transaction was valued at $11 billion and this merger deal resulted in the creation of the largest airline in the world. AMR Corp was the parent company of American Airlines which was emerging from bankruptcy and this horizontal merger is expected to strengthen its competitive position in the airline industry. It faced stiff competition from...
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