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Toeholds and Takeovers.

Abstract:

Part ownership of a takeover target can help a bidder win a takeover auction, often at a low price. A bidder with a 'toehold' bids aggressively in a standard ascending auction because its offers are both bids for the remaining shares and asks for its own holdings. While the direct effect of a toehold on a bidder's strategy may be small, the indirect effect is large in a common value auction. When a firm bids more aggressively, its competitors face an increased winner's curse and must bid more...

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Publisher:
CEPR
Volume:
1486
Series:
C.E.P.R. Discussion Papers
Host title:
C.E.P.R. Discussion Papers
Publication date:
1996-01-01
Paper number:
1486
Language:
English
UUID:
uuid:fa4e135e-0a31-4dbd-b5b4-1e26f0baf955
Local pid:
oai:economics.ouls.ox.ac.uk:11569
Deposit date:
2011-08-16

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