Takeover bids, unconditional offer price and investor protection
de La Bruslerie, Hubert; Deffains-Crapsky, Catherine (2005), Takeover bids, unconditional offer price and investor protection, Review of Financial Economics, 14, 2, p. 103-126. http://dx.doi.org/10.1016/j.rfe.2004.07.001
TypeArticle accepté pour publication ou publié
Journal nameReview of Financial Economics
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Abstract (EN)In this paper, we develop a contingent claim analysis on shareholders' right to sell unconditionally their shares at the acquisition bid price during a takeover bid procedure. Compared with a situation without any guarantee, this regulation brings about wealth transfer towards outside shareholders. Why, in an apparently irrational way, do outside shareholders, who may benefit from a price guarantee, not systematically sell their shares? That question emphasizes the outside shareholders' behavior. Using a real option valuation model to evaluate the price guarantee opportunity, we show that an equal treatment rule between controlling and outside shareholders may lead outside shareholders to sell their shares.
Subjects / KeywordsSTOCKHOLDERS; BID price; STOCKS (Finance) -- Prices; CONSOLIDATION & merger of corporations; CAPITALISTS & financiers; DEBT-to-equity ratio
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de La Bruslerie, Hubert; Deffains-Crapsky, Catherine (2008) Article accepté pour publication ou publié