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Incentives for Partial Acquisitions and Real Market Concentration

Patricia Charléty, Marie-Cecile Fagart and Saïd Souam ()

Journal of Institutional and Theoretical Economics (JITE), 2009, vol. 165, issue 3, 508-534

Abstract: We analyze the incentives for a controlling shareholder to acquire silent or controlling shares in a competitor. When it occurs, the acquisition is detrimental to minority shareholders of his firm, or to the target, or even to both. The ownership structure of firms turns out to be a key variable. The possession of initial silent toeholds in rivals unambiguously encourages further partial acquisitions, both controlling and silent. However, a higher initial controlling share generally stimulates controlling acquisitions, but always discourages silent ones. Finally, indirect acquisitions through the controlled firm are always controlling and preferred when the targeted block is small.

JEL-codes: D23 D43 G32 G34 (search for similar items in EconPapers)
Date: 2009
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