Valuation of takeovers in Singapore.

Abstract

This project examines the extent of differences between the offer prices of 34 takeovers of Singapore listed firms between the period 1983-1990 and the theoretical value per share as calculated by three selected valuation models. Our results indicate that the price-to-book method comes closest to the offer price. In addition, the project also examines the profitability of takeover in Singapore. Our results show that the returns averaged 20/0. Lastly, this project exammes the presence of a correlation between under or overvaluation and returns. We set a hypothesis that an undervalued firm would yield positive returns and vice versa. Our results indicate that there is no strong evidence among the 34 sample target firms that there is such a correlation