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Measuring Synergies of Banks' Cross-Border Mergers by Real Options: Case Study of Luminor Group AB
| Content Provider | MDPI |
|---|---|
| Author | Andrejs, Čirjevskis |
| Copyright Year | 2021 |
| Description | Applying the real options valuation to measure merger and acquisition (M&A) synergy is highly debatable, with questions arising from the usefulness of this approach in real-world settings. Understanding the full benefits (and possible limits) of real options applications to measure synergy in cross-border merger activities remains a challenge. The main objective of the paper is to explore multiple types of synergies in the recent, highly strategic cross-border merger—the Luminor Group AB deal—and to value those synergies with the real options application. The research found that the sum of values of different types of synergies in M&A deals as the market value added provided by this deal could be valued with real options applications. A real options application may serve as a decision-making tool and at the same time be a useful valuation method of M&A deal synergies. The implications of this paper are twofold. First, the research contributes to corporate financing by providing relevant synergy measurement models in M&A deals. Second, the paper contributes to “grand challenges’’ research topics of international businesses by illustrating how a group of multinational banks solved the problem of income inequality across countries, and balanced inequality within their networks through a cross-border merger. |
| Starting Page | 403 |
| e-ISSN | 19118074 |
| DOI | 10.3390/jrfm14090403 |
| Journal | Journal of Risk and Financial Management |
| Issue Number | 9 |
| Volume Number | 14 |
| Language | English |
| Publisher | MDPI |
| Publisher Date | 2021-08-26 |
| Access Restriction | Open |
| Subject Keyword | Journal of Risk and Financial Management Business and Management Mathematical Social Sciences Cross-border Merger Synergies Real Options |
| Content Type | Text |
| Resource Type | Article |
