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Why One Firm Is the Target and the Other the Bidder in Single-Bidder, Synergistic Takeovers

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  • Harris, Ellie G

Abstract

Since target firms obtain more of the synergy gains than bidder firms, the question arises of why, in single-bidder, synergistic takeovers, either firm is willing to be the bidder. The author argues that the takeover-related costs and benefits to the managers of the two firms determine which firm will be the target and which the bidder. A manager's fear that the firm with which his firm can create synergy gains will take over his firm and force him out of his job if his firm does not take it over makes him want his firm to be the bidder. Copyright 1994 by University of Chicago Press.

Suggested Citation

  • Harris, Ellie G, 1994. "Why One Firm Is the Target and the Other the Bidder in Single-Bidder, Synergistic Takeovers," The Journal of Business, University of Chicago Press, vol. 67(2), pages 263-280, April.
    • Handle: RePEc:ucp:jnlbus:v:67:y:1994:i:2:p:263-80
    DOI: 10.1086/296632
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    Cited by:

    1. Brook, Yaron & Hendershott, Robert J. & Lee, Darrell, 2000. "Corporate governance and recent consolidation in the banking industry," Journal of Corporate Finance, Elsevier, vol. 6(2), pages 141-164, July.
    2. N. Kohers & T. Kohers, 2004. "Information sensitivity of high tech industries: evidence from merger announcements," Applied Financial Economics, Taylor & Francis Journals, vol. 14(7), pages 525-536.
    3. Prokop, Jacek, 2005. "Monopolization through acquisition," MPRA Paper 43683, University Library of Munich, Germany, revised 2006.
    4. Jacek Prokop, 2005. "Monopolizacja poprzez wykup przedsiębiorstw," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 9, pages 47-62.
    5. Jacek Prokop, 2009. "Monopolisation of triopoly – revisited," International Journal of Computational Economics and Econometrics, Inderscience Enterprises Ltd, vol. 1(2), pages 113-125.

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