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Impact of takeover bid on Sainsbury stock return Abstract The paper examines the Sainsbury's stock market response to the events related to its takeover bid for Safeway using event study methodology. The methodology is to measure abnormal return surrounding the takeover events using daily share price data. It is found that Sainsbury's takeover bid results in significant negative abnormal return prior to, during and subsequent to its bid announcement for Safeway while there is non-significant abnormal return on other related events. Section 1: Introduction This paper is focused on the gains and losses of shareholders of Sainsbury which made takeover bid for Safeway during the period from 13 January 2003 to 26 September 2003. These related but separate events are shown in the following Table 1 (See Appendix 3: Background of Safeway takeover) (Table 1) Event Date Event Event 1 09/01/2003 Morrisons proposed merger with Safeway Event 2 13/01/2003 Sainsbury announced it was considering an offer for Safeway Event 3 14/01/2003 Wal-Mart announced it was considering an...

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