Mergers and Partial Ownership
AbstractIn this paper we compare the profitability of a merger to the pro…tability of a partial ownership arrangement and …nd that partial ownership arrangements can be more profiable for the acquiring and acquired firm because they can result in a greater dampening of competition. We also derive comparative statics on the prices of the acquiring firm, the acquired firm, and the outside firms. In a dual context, we show that a cross-majority owner may have incentives to sell a fraction of the shares in one of the firms he controls to a silent investor who is outside the industry. Aggregate ex post operating profit in the two firms controlled by the cross-majority shareholder then increases, such that both the cross-majority shareholder and the silent investor will be better o¤ with than without the partial divestiture.
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Bibliographic InfoPaper provided by Department of Economics, Norwegian School of Economics in its series Discussion Paper Series in Economics with number 1/2010.
Length: 20 pages
Date of creation: 21 Jan 2010
Date of revision:
Contact details of provider:
Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Phone: +47 55 959 277
Fax: 5595 9100
Web page: http://www.nhh.no/sam/
More information through EDIRC
Media economics; Mergers; Corporate Control; Financial Control;
Other versions of this item:
- Oystein Foros & Hans Jarle Kind & Greg Shaffer, 2010. "Mergers and Partial Ownership," CESifo Working Paper Series 2912, CESifo Group Munich.
- Foros, Øystein & Kind, Hans Jarle & Shaffer, Greg, 2010. "Mergers and Partial Ownership," Discussion Papers 2010/15, Department of Business and Management Science, Norwegian School of Economics.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-14 (All new papers)
- NEP-BEC-2011-05-14 (Business Economics)
- NEP-COM-2011-05-14 (Industrial Competition)
- NEP-IND-2011-05-14 (Industrial Organization)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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