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Article Dans Une Revue Scandinavian Journal of Economics Année : 2009

Takeover Contests, Toeholds and Deterrence

Résumé

We consider a setting in which two potential buyers, one with a prior toehold and one without, compete in a takeover modeled as an ascending auction with participating costs. The toeholder is more aggressive during the takeover process because she is also a seller of her own shares. The non-toeholder anticipates this extra-aggressiveness of the toeholder. Thus, he is deterred from participating unless he has a high valuation for the target company. This leads to large inefficiency losses. For many configurations, expected target returns are first increasing then decreasing in the size of the toehold.
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Dates et versions

hal-00702428 , version 1 (06-06-2012)

Identifiants

  • HAL Id : hal-00702428 , version 1

Citer

David Ettinger. Takeover Contests, Toeholds and Deterrence. Scandinavian Journal of Economics, 2009, 111 (1), pp.103-124. ⟨hal-00702428⟩
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