Bidding, negotiations and take-over prices

Cynthia Van Hulle and Piet Sercu

European Management Journal, 1991, vol. 9, issue 2, 186-193

Abstract: The authors argue that it is bargaining, not competition, which determines the way gains are distributed in take-over bids. Focusing on 'unfriendly' take-overs, where the target company's current management leaves, they show how bargaining and bidding interact to generate the take-over price and enable target shareholders to benefit most. Bargaining itself is influenced by the time-value of money, competition, financial strength and initial bargaining power.

Date: 1991
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