Hostile versus friendly takeovers
AbstractThis paper analyzes the choice of a raider between a hostile and a friendly takeover. If the target company's manager has private information about the scope for efficiency gains, it is shown that the raider may prefer a hostile acquisition even if transaction costs for a friendly takeover are much smaller. The raider actually chooses between a (hostile) tender offer to uninformed shareholders and (friendly) merger negotiations with the informed manager. The author shows how the uncertainty about potential efficiency gains, the manager's preference for control, the number of shares held by the manager, and transaction costs affect the raider's choice. Copyright 1996 by The London School of Economics and Political Science.
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Bibliographic InfoPaper provided by University of Bonn, Germany in its series Discussion Paper Serie A with number 299.
Date of creation: May 1990
Date of revision:
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takeover; shareholder; decision of a raider;
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- Dickerson, Andrew P. & Gibson, Heather D. & Tsakalotos, Euclid, 2002.
"Takeover risk and the market for corporate control: the experience of British firms in the 1970s and 1980s,"
International Journal of Industrial Organization,
Elsevier, vol. 20(8), pages 1167-1195, October.
- Andrew P. Dickerson & Heather D. Gibson & Euclid Tsakalotos, 1998. "Takeover Risk and the Market for Corporate Control: The Experience of British Firms in the 1970s and 1980s," Studies in Economics 9803, Department of Economics, University of Kent.
- Mohd Irfan, 2011. "The role of executives in hostile takeover attempts," Journal of Economic Interaction and Coordination, Springer, vol. 6(1), pages 29-40, May.
- Mohd, Irfan, 2010. "The Role of Executives in Hostile Takeover Attempts," MPRA Paper 22123, University Library of Munich, Germany, revised 15 Apr 2010.
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