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Regulation and the Market for Corporate Control: Hostile Tender Offers for Electric and Gas Utilities

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  • McLaughlin, Robyn M
  • Mehran, Hamid

Abstract

We document that regulation significantly constrains takeover activity. Of the twenty-one hostile offers for utilities between 1960 and 1990, only one was successful. In spite of this low rate of completion, announcement period returns to target utilities are positive and significant, although substantially smaller than average returns to nonregulated targets. We examine post-offer events and find that control-market effects are not entirely eliminated. One-third of hostile offers are followed by additional bids, control changes and/or divestitures. The regulatory and political environment changed during the period of this study and the frequency of hostile offers increased. Utility regulation, however, remains a substantial impediment to the completion of hostile takeovers. Copyright 1995 by Kluwer Academic Publishers

Suggested Citation

  • McLaughlin, Robyn M & Mehran, Hamid, 1995. "Regulation and the Market for Corporate Control: Hostile Tender Offers for Electric and Gas Utilities," Journal of Regulatory Economics, Springer, vol. 8(2), pages 181-204, September.
  • Handle: RePEc:kap:regeco:v:8:y:1995:i:2:p:181-204
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    Cited by:

    1. Ovtchinnikov, Alexei V., 2013. "Merger waves following industry deregulation," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 51-76.
    2. Evgenii Monastyrenko, 2016. "Cross-Border M&As and Eco-Environmental Performance of European Energy Utilities," FIW Working Paper series 169, FIW.
    3. Verde, Stefano, 2008. "Everybody merges with somebody--The wave of M&As in the energy industry and the EU merger policy," Energy Policy, Elsevier, vol. 36(3), pages 1125-1133, March.
    4. Trillas, Francesc, 2001. "The takeover of Enersis: the control of privatized utilities," Utilities Policy, Elsevier, vol. 10(1), pages 25-45, March.
    5. Kishimoto, Jo & Goto, Mika & Inoue, Kotaro, 2017. "Do acquisitions by electric utility companies create value? Evidence from deregulated markets," Energy Policy, Elsevier, vol. 105(C), pages 212-224.
    6. Bur├žak Polat, 2017. "FDI entry mode choice and ownership structure in Turkish market: A firm-level analysis," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1283762-128, January.

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