Leveraged public to private transactions in the UK

Luc Renneboog (), Tomas Simons and Mike Wright
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Mike Wright: Tilburg University, Center for Economic Research

No 60, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: This paper examines the magnitude and the sources of the expected shareholder gains in UK public to private transactions (PTPs) in the second wave from 1997-2003. Pre-transaction shareholders on average receive a premium of 40% and the share price reaction to the PTP announcement is about 30%. The main sources of the shareholder wealth gains are undervaluation of the pre-transaction target firm, increased interest tax shields and incentive realignment. An expected reduction of free cash flows does not determine the premiums nor are PTPs a defensive reaction against a takeover.

JEL-codes: G34 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fin
Date: Written 2005
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Related works:
Working Paper: Leveraged public to private transactions in the UK (2005)
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