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Leveraged Public to Private Transactions in the UK

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  • Renneboog, L.D.R.
  • Simons, T.
  • Wright, M.

    (Tilburg University, Center for Economic Research)

Abstract

This paper examines the magnitude and the sources of the expected shareholder gains in UK public to private transactions (PTPs) in the second wave from 1997-2003.Pre-transaction shareholders on average receive a premium of 40% and the share price reaction to the PTP announcement is about 30%.The main sources of the shareholder wealth gains are undervaluation of the pre-transaction target firm, increased interest tax shields and incentive realignment.An expected reduction of free cash flows does not determine the premiums nor are PTPs a defensive reaction against a takeover.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2005-60.

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Date of creation: 2005
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Handle: RePEc:dgr:kubcen:200560

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Keywords: Public to private; going-private; LBO; MBO; IBO; Management buyins; Management buyouts; Leveraged buyouts;

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References

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Citations

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Cited by:
  1. Christian Andres & André Betzer & Charlie Weir, 2007. "Shareholder wealth gains through better corporate governance—The case of European LBO-transactions," Financial Markets and Portfolio Management, Springer, vol. 21(4), pages 403-424, December.
  2. Renneboog, L.D.R. & Szilagyi, P.G., 2006. "Corporate Restructuring and Bondholder Wealth," Discussion Paper 2006-007, Tilburg University, Tilburg Law and Economic Center.
  3. Wright, M. & Renneboog, L.D.R. & Simons, T. & Scholes, L., 2006. "Leveraged Buyouts in the U.K. and Continental Europe: Retrospect and Prospect," Discussion Paper 2006-70, Tilburg University, Center for Economic Research.

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