Dividends and M&A transactions financing

The basic methods of payment in case of mergers and acquisitions are: cash and exchange of shares. Acquisitions of publicly listed companies have to be done by invitations to sell shares (tender offers). In tender offer transactions it is possible to pay for the shares of the target company both in cash and shares. However, the attempts of takeovers which took place on the Warsaw Stock Exchange in years 2002-2010 were always completed with cash. Since the acquiring companies had to raise enough cash, it has been hypothesized that during a few years before attempting to take over a company, the acquirers pay dividends to a lesser extent than other listed companies. The conducted analysis, however, tends to reject this hypothesis, which means that there is no significant difference between the dividend payments by companies wishing to take over another company and the average one for all listed companies.