An investigation into the drivers of Australian REIT merger and acquisition announcements

Purpose – The purpose of this paper is to use Australian Real Estate Investment Trust (A-REIT) data to empirically examine potential influencing factors on A-REITs becoming a bidder or a target in the mergers and acquisitions (M&A) area.

Design/methodology/approach – This study uses logistic regression analysis to investigate the odds of publically traded A-REITs being either a bidder or a target as a function of a number of financial and corporate governance variables.

Findings – Prior research in the US REIT M&A area has shown that target size is inversely related to takeover likelihood; in contrast, the authors’ Australian results show that size has a positive impact. Prior research on share price and asset performance has shown that underperformance increases the odds of an entity becoming a target, but this paper’s results further support these findings and provide confirmation of the inefficient management hypothesis. For acquirers it was found that leverage, cash balances, management structure, the level of shares held by related parties and the global financial crisis have an important impact on bidder likelihood.

Practical implications – Given that the literature suggests that investors can earn significant positive abnormal returns by owning targets, but incur significant abnormal losses by owning bidders, at announcement, this study will be useful to fund managers and other investors in A-REITs by investigating the characteristics of those firms that become targets and bidders.

Originality/value – This paper adds to the recent US REIT M&A literature by examining the second biggest REIT market in the world and reporting a number of factors that might influence A-REITs to become targets or bidders.

Psychological oil price barrier and firm returns

In this paper, we investigate the psychological barrier effect induced by the oil price on firm returns when the oil price reaches US$100 or more per barrel. We find evidence of the negative effect of the US$100 oil price barrier for: (a) the entire sample of 1559 firms listed on the American stock exchanges; (b) both foreign and domestic firms, with domestic firms significantly more affected; (c) the 10 different sizes of firms, with the smaller firms less affected compared to the larger firms; and (d) 17 sectors of firms, with firms in the utilities, mining, and administration sectors being the least affected.

The market for corporate control: the case of Australian listed property

 This study investigates the underlying motivation(s) for mergers and acquisitions in the Australian Real Estate Investment Trust sector. Results across the three periods of pre-, during and post-announcement show that mergers and acquisitions create synergistic benefits for both targets and bidders.

Pseudomonas aeruginosa genotypes acquired by children with cystic fibrosis by age 5-years

BACKGROUND: We describe Pseudomonas aeruginosa acquisitions in children with cystic fibrosis (CF) aged ≤5-years, eradication treatment efficacy, and genotypic relationships between upper and lower airway isolates and strains from non-CF sources. METHODS: Of 168 CF children aged ≤5-years in a bronchoalveolar lavage (BAL)-directed therapy trial, 155 had detailed microbiological results. Overall, 201/271 (74%) P. aeruginosa isolates from BAL and oropharyngeal cultures were available for genotyping, including those collected before and after eradication therapy. RESULTS: Eighty-two (53%) subjects acquired P. aeruginosa, of which most were unique strains. Initial eradication success rate was 90%, but 36 (44%) reacquired P. aeruginosa, with genotypic substitutions more common in BAL (12/14) than oropharyngeal (3/11) cultures. Moreover, oropharyngeal cultures did not predict BAL genotypes reliably. CONCLUSIONS: CF children acquire environmental P. aeruginosa strains frequently. However, discordance between BAL and oropharyngeal strains raises questions over upper airway reservoirs and how to best determine eradication in non-expectorating children.

Ultra-wideline 14N solid-state NMR as a method for differentiating polymorphs: glycine as a case study

Nitrogen-14 solid-state NMR (SSNMR) is utilized to differentiate three polymorphic forms and a hydrochloride (HCl) salt of the amino acid glycine. Frequency-swept Wideband, Uniform Rate, Smooth Truncated (WURST) pulses were used in conjunction with Carr-Purcell Meiboom-Gill refocusing, in the form of the WURST-CPMG pulse sequence, for all spectral acquisitions. The ¹⁴N quadrupolar interaction is shown to be very sensitive to variations in the local electric field gradients (EFGs) about the ¹⁴N nucleus; hence, differentiation of the samples is accomplished through determination of the quadrupolar parameters CQ and ηQ, which are obtained from analytical simulations of the ¹⁴N SSNMR powder patterns of stationary samples (i.e., static NMR spectra). Additionally, differentiation of the polymorphs is also possible via the measurement of ¹⁴N effective transverse relaxation time constants, T^eff2(¹⁴N). Plane-wave density functional theory (DFT) calculations, which exploit the periodicity of crystal lattices, are utilized to confirm the experimentally determined quadrupolar parameters as well as to determine the orientation of the ¹⁴N EFG tensors in the molecular frames. Several signal-enhancement techniques are also discussed to help improve the sensitivity of the ¹⁴N SSNMR acquisition method, including the use of selective deuteration, the application of the BRoadband Adiabatic INversion Cross-Polarization (BRAIN-CP) technique, and the use of variable-temperature (VT) experiments. Finally, we examine several cases where ¹⁴N VT experiments employing Carr-Purcell-Meiboom-Gill (CPMG) refocusing are used to approximate the rotational energy barriers for RNH3⁺ groups.

"Ready to acquire": the IT resources required for a growth-by-acquisition business strategy

This article describes the experiences of Danisco (a global food ingredients company) as it followed a growth-by-acquisition business strategy, focusing on how a new CIO built the IT resources to ensure the IT organization was "ready to acquire." We illustrate how these IT capabilities expedited the IT integration following two acquisitions, one of which involved Danisco expanding the scale of its business and the other extending the scope. Based on insights gained from Danisco, we provide lessons for CIOs to realize business benefits when managing post-acquisition IT integration.

The implications of family control and political connections: evidence from China

This thesis investigates the implications of family control and political connections. The empirical results indicate that in emerging markets with an undeveloped legal system, controlling families have incentive to expropriate minority shareholders. It also reveals the importance of political connections in the M&A market in China.

What do you do with a High Court decision you don’t like? Legislative, judicial and academic responses to Gambotto v WCP Ltd

The decision of the High Court of Australia in Gambotto v WCP Ltd wasboth controversial and widely debated. Some saw the decision as radically altering the balance of power in corporate law by granting minority shareholders extensive new powers to prevent the compulsory acquisition of their shares and thereby impeding commercial transactions that would benefit companies. There was also concern that the principles developed by the High Court for compulsory acquisition of shares undertaken by way of amendment of the corporate constitution would apply to other forms of compulsory acquisition, and corporate law more generally, again impeding many types of corporate transactions.We analyse the responses to the High Court decision. The decision had the potential to have a significant influence on Australian corporate law and the way corporate transactions involving compulsory share acquisitions are conducted. In particular, Gambotto was considered in more than 50 subsequent judgments giving many judges the opportunity to extend the Gambotto principles into new areas.We show that the responses to Gambotto were largely negative. Initial commentary in themedia and subsequent academic commentary was mostly critical. Almost uniformly, courts decided that the principles should not be extended.Parliament responded by enacting new provisions in the corporationslegislation facilitating the compulsory acquisition of shares and limiting the application of Gambotto. We document how courts and Parliamentresponded to a decision they did not like — a decision that had the potential to have major implications for corporate law and commercial transactions.We also analyse Gambotto by placing it in the broader political context ofthe role of the High Court at the time of the decision. Gambotto was decided when the High Court was in a period of unprecedented judicial activism.Subsequently, the High Court retreated from this judicial activism and weobserve similarities in how other courts restricted the application ofGambotto.

Industry expertise, information leakage and the choice of M&A advisors

This paper examines the impacts of M&A advisors’ industry expertise on firms’choice of advisors in mergers and acquisitions. We show that an investment bank’s expertise in merger parties’ industries increases its likelihood of being chosen as an advisor, especially when the acquisition is more complex, and when a firm in M&A has less information about the merger counter party. However, due to the concerns about information leakage to industry rivals through M&A advisors, acquirers are reluctant to share advisors with rival firms in thesame industry, and they are more likely to switch to new advisors if their former advisors have advisory relationship with their industry rivals. In addition, we document that advisors with more industry expertise earn higher advisory fees and increase the likelihood of deal completion.