 On the determinants of the dynamic choice between mergers and tender offersElmar Lukas, Paulo J. Pereira and Artur Rodrigues Journal of Corporate Finance, 2023, vol. 83, issue C Abstract: This paper builds on recent advances in the domain of dynamic M&A option games under uncertainty and looks closer at the determinants that drive the strategic choice between mergers and tender offers. In particular, our model sheds new light in understanding the effects of uncertainty and relative size of firms on the choice of the M&A strategy. We not only show that uncertainty and relative size do impact the choice of the strategy, but we also show that the impact of uncertainty is non-monotonic. In fact, tender offers are more likely in a context of relatively low/high volatility. For intermediate uncertainty values mergers become more likely. Furthermore, the smaller/weaker the target relative to the bidder the more likely are tender offers. Additionally, our model also shows that the tender offer payoff is larger than the merger payoff, suggesting that larger combined CARs should be observed for tender offers. Our empirical study gives support to these results. Keywords: Mergers; Tender offers; Real options; Cooperative and non-cooperative bargaining (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:83:y:2023:i:c:s0929119923001384 DOI: 10.1016/j.jcorpfin.2023.102489 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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