Burkart, Mike, Gromb, Denis and Panunzi, Fausto (2005) Minority blocks and takeover premia. Discussion paper, 544. Financial Markets Group, London School of Economics and Political Science, London, UK.
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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.
|Item Type:||Monograph (Discussion Paper)|
|Additional Information:||© 2005 The Authors|
|Library of Congress subject classification:||H Social Sciences > HG Finance
H Social Sciences > HB Economic Theory
|Journal of Economic Literature Classification System:||G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance|
|Sets:||Research centres and groups > Financial Markets Group (FMG)
Collections > Economists Online
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