Minority blocks and takeover premia

Burkart, Mike ORCID: 0000-0002-0954-4499, Gromb, Denis and Panunzi, Fausto (2006) Minority blocks and takeover premia. Journal of Institutional and Theoretical Economics, 162 (1). pp. 32-49. ISSN 0932-4569

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Abstract

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 posttakeover 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 so that the posttakeover 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:	Article
Official URL:	https://www.mohr.de/en/journals/journal-of-institu...
Additional Information:	© 2006 Mohr Siebeck
Divisions:	Finance
Subjects:	H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Date Deposited:	22 Feb 2017 10:21
Last Modified:	01 Apr 2024 08:15
URI:	http://eprints.lse.ac.uk/id/eprint/69546

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