Does the organisational form of the target influence market reaction to acquisition announcements? Australian evidence

• Wealth effect of acquisition announcements depends on target's organisational form.
• Acquirers of private and subsidiary targets earn higher abnormal returns.
• Bid and firm characteristics systematically influence the market reaction.
• Influence of break fees on excess return differs across target categories.
• Acquisitions of private targets during GFC are rewarded by the capital market.

Using public, private and subsidiary acquisitions, we examine whether abnormal returns to bidders depend on the organisational form of the target acquired. The evidence supports two main hypotheses: (i) bidders on private and subsidiary targets earn higher abnormal returns than bidders on public entities and (ii) bidders on private targets earn higher abnormal returns when the method of payment is stock. Acquisitions of unlisted public targets, privately negotiated acquisitions of private targets and acquisitions of subsidiaries from listed parents for cash are associated with higher abnormal returns.