How do acquirers choose between mergers and tender offers?
Tender offers provide the advantage of substantially faster completion times than mergers. However, a tender offer signals to the target higher demand for its shares and raises its reservation price. In equilibrium, bidders tradeoff speed and cost. Consistent with this theory, we show that deals in...
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| Veröffentlicht in: | Journal of financial economics 2015-05, Vol.116 (2), p.331-348 |
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| container_end_page | 348 |
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| container_title | Journal of financial economics |
| container_volume | 116 |
| creator | Offenberg, David Pirinsky, Christo |
| description | Tender offers provide the advantage of substantially faster completion times than mergers. However, a tender offer signals to the target higher demand for its shares and raises its reservation price. In equilibrium, bidders tradeoff speed and cost. Consistent with this theory, we show that deals in more competitive environments and deals with fewer external impediments on execution are more likely to be structured as tender offers. Tender offers also require higher premiums than mergers. Finally, the rivals of the bidding firm realize significantly lower announcement returns and subsequent operating performance in tender offers than in mergers. |
| doi_str_mv | 10.1016/j.jfineco.2015.02.006 |
| format | Article |
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| identifier | ISSN: 0304-405X |
| ispartof | Journal of financial economics, 2015-05, Vol.116 (2), p.331-348 |
| issn | 0304-405X 1879-2774 |
| language | eng |
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| source | Elsevier ScienceDirect Journals |
| subjects | Arbitrage spreads Competition Competitiveness Decision analysis Economic theory Enterprises Equilibrium Mergers Mergers and acquisitions Premiums Rates of return Reservation price Studies Takeover premiums Tender offers Termination fees |
| title | How do acquirers choose between mergers and tender offers? |
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