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Competition, Auctions & Negotiations in REIT Takeovers


  • J. Mulherin


  • Kiplan Womack



The lack of hostile takeovers and relatively modest wealth gains associated with REIT mergers motivate two fundamental yet previously unexplored questions: how competitive are REIT takeovers, and how exactly does a REIT sell itself to another firm? This paper examines these questions using hand-collected data from SEC merger filings. Four primary findings emerge from this study. First, REITs most often utilize a sales process resembling an auction, where an average of 19 potential buyers are contacted. Second, REIT mergers are on average just as competitive, or more so, as those in other industries. Third, the market for corporate control for REITs is more active than previously thought. Fourth, failure to account for publicly available signals that a REIT is for sale (which typically occur several months in advance prior to the official public merger announcement) results in omitting approximately one third of the total shareholder wealth effect produced by REIT mergers. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • J. Mulherin & Kiplan Womack, 2015. "Competition, Auctions & Negotiations in REIT Takeovers," The Journal of Real Estate Finance and Economics, Springer, vol. 50(2), pages 151-180, February.
  • Handle: RePEc:kap:jrefec:v:50:y:2015:i:2:p:151-180 DOI: 10.1007/s11146-013-9447-7

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    References listed on IDEAS

    1. French, Kenneth R & McCormick, Robert E, 1984. "Sealed Bids, Sunk Costs, and the Process of Competition," The Journal of Business, University of Chicago Press, vol. 57(4), pages 417-441, October.
    2. Jeremy Bulow & Paul Klemperer, 2009. "Why Do Sellers (Usually) Prefer Auctions?," American Economic Review, American Economic Association, vol. 99(4), pages 1544-75, September.
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