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On the acquisition of equity carve-outs

  • Desai, Chintal A.
  • Klock, Mark S.
  • Mansi, Sattar A.
Registered author(s):

    We examine the role played by the parent’s motive in undertaking a carve-out; the parent’s post-IPO influence over the carved-out subsidiary; and anti-takeover provisions and industry structure of a carve-out on its acquisition likelihood and its acquisition premium. We find that the probability and hazard of a carve-out acquisition increase when the parent’s objective is to unlock the value of a subsidiary and when the parent and the subsidiary are tied with a product-market relationship. We also find that the post-IPO parent ownership significantly affects the acquisition likelihood and the level of acquisition premium. Additional analyses examining the post-IPO carve-out status suggest that the product-market relationship and post-IPO parent ownership increase the probability of re-acquisition.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0378426611001889
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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 35 (2011)
    Issue (Month): 12 ()
    Pages: 3432-3449

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    Handle: RePEc:eee:jbfina:v:35:y:2011:i:12:p:3432-3449
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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