The Performance of Acquisitions by High Default Risk Bidders

We investigate the takeover strategies of high default risk acquirers and their value impact. We find that these bidders select bigger, less profitable and unrelated targets, pursue transactions during recessions, and pay with shares by offering target shareholders high premiums. Their long-term buy-and-hold returns are extremely negative, and reflect fundamentally their substantial drop in profitability combined with high leverage. We show that the well-established long-run underperformance of acquiring firms is largely driven by this sub-set of acquirers. The results are similar when we use alternative measures of default risk and performance, and a global sample of non-US bidders

Essays on Firm Valuation and Value Appropriation

Sophisticated valuation techniques such as adjusted present value and real options, attract ever-increasing attention from theory and practice. A huge number of papers in the academic field provide various applications of these advanced tools, for instance valuing research and development, strategic alliances and real estate. Real options have also been used for valuing mergers and acquisitions. However, notwithstanding the rich knowledge about valuation models applicable for valuing takeovers, there remains a need to further develop theories about the distribution of the value creation between the target’s and acquirer’s shareholders. In other words, what part of the value creation can the acquirer appropriate? Strategic management literature underlines the impact of possessing unique capabilities, and both the strategic and financial literature emphasize the role of information asymmetry in explaining value appropriation in acquisitions. In this dissertation both simple and more complex valuation models are discussed, and we propose a real option-game model that analyzes the acquirer’s value appropriation. In our valuation and value appropriation models, the specific resources and capabilities of the evaluator are considered. By explicitly taking the acquirer resources into account in the valuation analysis, and by developing a new application of a combined option-game model, this PhD thesis is taking a step in further bridging the gap between finance theory and strategic management.Wouter De Maeseneire (1977) obtained his Master’s degree in Applied Economics magna cum laude from Ghent University, Belgium, in 1999. He joined the Department of Corporate Finance at Ghent University and the Competence Centre Accounting and Finance at the Vlerick Leuven Gent Management School in September 1999. In September 2001, Wouter was awarded with a scholarship from the Fund for Scientific Research-Flanders (Aspirant). In September 2002 he also joined ERIM as a PhD candidate to carry out his doctoral research. His work has been presented at several international conferences e.g., at the conferences of the European Financial Management Association and of the Strategic Management Society. His current research interests include valuation, real options and private equity

Acquisitions as a Real Options Bidding Game

This paper uses a unified treatment of real options and game theory to examine value appropriation in takeovers within a competitive environment of imperfect information. The integrated model considers a potential target as a shared real option on a bundle of resources. Competing potential buyers may sequentially perform due diligence and incur costs (option premium) to become informed about their firm-specific target value (underlying value) before making a bid (exercise price). The first player’s bid provides a signal on its own and rivals’ target value, thereby affecting potential bidders’ option value. The level of information costs and the option value, affected by heterogeneity between bidders (correlation), their expected target value, and uncertainty, determine value appropriation in acquisitions

Intravenous alteplase for stroke with unknown time of onset guided by advanced imaging: systematic review and meta-analysis of individual patient data

Background: Patients who have had a stroke with unknown time of onset have been previously excluded from thrombolysis. We aimed to establish whether intravenous alteplase is safe and effective in such patients when salvageable tissue has been identified with imaging biomarkers. Methods: We did a systematic review and meta-analysis of individual patient data for trials published before Sept 21, 2020. Randomised trials of intravenous alteplase versus standard of care or placebo in adults with stroke with unknown time of onset with perfusion-diffusion MRI, perfusion CT, or MRI with diffusion weighted imaging-fluid attenuated inversion recovery (DWI-FLAIR) mismatch were eligible. The primary outcome was favourable functional outcome (score of 0–1 on the modified Rankin Scale [mRS]) at 90 days indicating no disability using an unconditional mixed-effect logistic-regression model fitted to estimate the treatment effect. Secondary outcomes were mRS shift towards a better functional outcome and independent outcome (mRS 0–2) at 90 days. Safety outcomes included death, severe disability or death (mRS score 4–6), and symptomatic intracranial haemorrhage. This study is registered with PROSPERO, CRD42020166903. Findings: Of 249 identified abstracts, four trials met our eligibility criteria for inclusion: WAKE-UP, EXTEND, THAWS, and ECASS-4. The four trials provided individual patient data for 843 individuals, of whom 429 (51%) were assigned to alteplase and 414 (49%) to placebo or standard care. A favourable outcome occurred in 199 (47%) of 420 patients with alteplase and in 160 (39%) of 409 patients among controls (adjusted odds ratio [OR] 1·49 [95% CI 1·10–2·03]; p=0·011), with low heterogeneity across studies (I2=27%). Alteplase was associated with a significant shift towards better functional outcome (adjusted common OR 1·38 [95% CI 1·05–1·80]; p=0·019), and a higher odds of independent outcome (adjusted OR 1·50 [1·06–2·12]; p=0·022). In the alteplase group, 90 (21%) patients were severely disabled or died (mRS score 4–6), compared with 102 (25%) patients in the control group (adjusted OR 0·76 [0·52–1·11]; p=0·15). 27 (6%) patients died in the alteplase group and 14 (3%) patients died among controls (adjusted OR 2·06 [1·03–4·09]; p=0·040). The prevalence of symptomatic intracranial haemorrhage was higher in the alteplase group than among controls (11 [3%] vs two [<1%], adjusted OR 5·58 [1·22–25·50]; p=0·024). Interpretation: In patients who have had a stroke with unknown time of onset with a DWI-FLAIR or perfusion mismatch, intravenous alteplase resulted in better functional outcome at 90 days than placebo or standard care. A net benefit was observed for all functional outcomes despite an increased risk of symptomatic intracranial haemorrhage. Although there were more deaths with alteplase than placebo, there were fewer cases of severe disability or death. Funding: None

31st Annual Meeting and Associated Programs of the Society for Immunotherapy of Cancer (SITC 2016) : part two

Background The immunological escape of tumors represents one of the main ob- stacles to the treatment of malignancies. The blockade of PD-1 or CTLA-4 receptors represented a milestone in the history of immunotherapy. However, immune checkpoint inhibitors seem to be effective in specific cohorts of patients. It has been proposed that their efficacy relies on the presence of an immunological response. Thus, we hypothesized that disruption of the PD-L1/PD-1 axis would synergize with our oncolytic vaccine platform PeptiCRAd. Methods We used murine B16OVA in vivo tumor models and flow cytometry analysis to investigate the immunological background. Results First, we found that high-burden B16OVA tumors were refractory to combination immunotherapy. However, with a more aggressive schedule, tumors with a lower burden were more susceptible to the combination of PeptiCRAd and PD-L1 blockade. The therapy signifi- cantly increased the median survival of mice (Fig. 7). Interestingly, the reduced growth of contralaterally injected B16F10 cells sug- gested the presence of a long lasting immunological memory also against non-targeted antigens. Concerning the functional state of tumor infiltrating lymphocytes (TILs), we found that all the immune therapies would enhance the percentage of activated (PD-1pos TIM- 3neg) T lymphocytes and reduce the amount of exhausted (PD-1pos TIM-3pos) cells compared to placebo. As expected, we found that PeptiCRAd monotherapy could increase the number of antigen spe- cific CD8+ T cells compared to other treatments. However, only the combination with PD-L1 blockade could significantly increase the ra- tio between activated and exhausted pentamer positive cells (p= 0.0058), suggesting that by disrupting the PD-1/PD-L1 axis we could decrease the amount of dysfunctional antigen specific T cells. We ob- served that the anatomical location deeply influenced the state of CD4+ and CD8+ T lymphocytes. In fact, TIM-3 expression was in- creased by 2 fold on TILs compared to splenic and lymphoid T cells. In the CD8+ compartment, the expression of PD-1 on the surface seemed to be restricted to the tumor micro-environment, while CD4 + T cells had a high expression of PD-1 also in lymphoid organs. Interestingly, we found that the levels of PD-1 were significantly higher on CD8+ T cells than on CD4+ T cells into the tumor micro- environment (p < 0.0001). Conclusions In conclusion, we demonstrated that the efficacy of immune check- point inhibitors might be strongly enhanced by their combination with cancer vaccines. PeptiCRAd was able to increase the number of antigen-specific T cells and PD-L1 blockade prevented their exhaus- tion, resulting in long-lasting immunological memory and increased median survival

How do Investments Banks Value Initial Public Offerings (IPOs)?

We investigate the valuation and the pricing of initial public offerings (IPOs) by investment banks for a unique dataset of 49 IPOs on Euronext Brussels in the 1993¿2001 period. We find that for each IPO several valuation methods are used, of which Discounted Free Cash Flow (DFCF) is the most popular. The offer price is mainly based on DFCF valuation, to which a discount is applied. Our results suggest that DDM tends to underestimate value, while DFCF produces unbiased value estimates. When using multiples, investment banks rely mostly on future earnings and cash flows. Multiples based on post-IPO forecasted earnings and cash flows result in more accurate valuations