The impact of food and beverage mergers on the shareholder value with specific reference to South Africa

Abstract

This study is aimed at investigating the effect of mergers and acquisitions on the share prices and dividends involving South African companies in the food and beverage industry. A sample of 79 mergers from 1999 to 2005 was used. The data was analysed using the event study methodology and descriptive statistics. In addition, the paired t-test was also conducted to test the significance of the results. The results were presented using graphs, tables and charts. The results showed that target companies obtained negative abnormal returns during the announcement of mergers while acquiring companies on the other hand received positive abnormal returns. The results imply that it can no longer be generalized that target companies always win and acquiring companies lose during the merger activity. On the other hand, the dividends for target companies increased significantly after the merger, while the dividends for acquiring companies remained insignificantly negative after the merger.