Incentives for Partial Acquisitions and Real Market Concentration

Patricia Charléty (1) , Marie-Cécile Fagart (1) , Saïd Souam (1)

1 CEPN - Centre d'Economie de l'Université Paris Nord (ancienne affiliation)

We analyze the incentives of a controlling shareholder of a firm to acquire, directly or indirectly through his firm, shares in a competitor. We charaterize the conditions under which these partial acquisitions as well as the equilibrium toehold and its nature: controlling or silent. We find that while this shareholder gains, the acquisition is detrimental to minority shareholders of his firm, or of the target, or even of both. We show that the incentives are enhanced if the dominant shareholder initially holds silent stakes in rivals while controlling interests may discourage them. Moreover, we find that partial acquisitions always lead to a decrease in the joint profit of the two firms involved, and an increase in competitor's profits as the market becomes less competitive.

Mots clés: horizontal partial acquisitions; real market concentration; dominant shareholder; minority shareholders; silent interests.; silent interests

Domaines: Economies et finances

Patricia Charléty, Marie-Cécile Fagart, Saïd Souam. Incentives for Partial Acquisitions and Real Market Concentration. 2007. ⟨hal-00143911⟩