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Minority Blocks And Takeover Premia

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  • Fausto Panunzi
  • Denis Gromb
  • Mike Burkart

    ()

Abstract

This paper analyses takeovers of companies owned by atomistic shareholders and by one minority blockholder, all of whom can only decide to tender or retain their shares. As private benefit extraction is inefficient, the post-takeover share value increases with the bidder’s shareholdings. In a successful takeover, the blockholder tenders all his shares and the small shareholders tender the amount needed such that the post-takeover share value matches the bid price. Compared to a fully dispersed target company, the bidder may have to offer a higher price either to win the blockholder’s support or to attract enough shares from small shareholders. (JEL G34)

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Bibliographic Info

Paper provided by Financial Markets Group in its series FMG Discussion Papers with number dp544.

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Date of creation: Sep 2005
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Handle: RePEc:fmg:fmgdps:dp544

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Citations

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Cited by:
  1. Samuel Lee & Christian At & Mike Burkart, 2007. "Security-Voting Structure and Bidder Screening," FMG Discussion Papers dp575, Financial Markets Group.
  2. Ferreira, Daniel & Ornelas, Emanuel & Turner, John L., 2007. "Unbundling Ownership and Control," CEPR Discussion Papers 6257, C.E.P.R. Discussion Papers.
  3. Mike Burkart & Samuel Lee, 2010. "Signaling in Tender Offer Games," FMG Discussion Papers dp655, Financial Markets Group.

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