Who wins from takeover battles?

Takeover battles, such as between AB InBev and SABMiller, are soon over, says Cris Sholto Heaton. Finding out which shareholders are the winners takes much longer.

There's a good chance that the long-awaited tie-up between brewing giants AB InBev and SABMiller (see below) will go ahead, despite SABMiller's efforts to remain independent. But while the takeover battle could be over within a week, it will take much longer to find out which shareholders are the real winners.

Market wisdom holds that about one in ten deals benefits shareholders in the bidding firm. This figure seems to have come from a KPMG study that took place at the height of the tech bubble: it found that just 17% of deals helped the acquirer and more than half destroyed value. KPMG's follow-up reports suggested that this was an extreme outcome: between 1999 and 2009, roughly one-third of deals created value, one-third were neutral and one-third destroyed value. But it certainly suggests that mergers and acquisitions (M&A) usually disappoint.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.