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Minority blocks and takeover premia

Mike Burkart (), Denis Gromb and Fausto Panunzi

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper analyses takeovers of companies owned by atomistic shareholders and by one minority blockholder, all of whom can only decide to tender or retain their shares. As private benefit extraction is inefficient, the posttakeover share value increases with the bidder's shareholdings. In a successful takeover, the blockholder tenders all his shares and the small shareholders tender the amount needed so that the posttakeover share value matches the bid price. Compared to a fully dispersed target company, the bidder may have to offer a higher price either to win the blockholder's support or to attract enough shares from small shareholders.

JEL-codes: G34 (search for similar items in EconPapers)
Date: 2006-03
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Published in Journal of Institutional and Theoretical Economics, March, 2006, 162(1), pp. 32-49. ISSN: 0932-4569

Downloads: (external link)
http://eprints.lse.ac.uk/69546/ Open access version. (application/pdf)

Related works:
Journal Article: Minority Blocks and Takeover Premia (2006) Downloads
Working Paper: Minority Blocks and Takeover Premia (2005) Downloads
Working Paper: Minority blocks and takeover premia (2005) Downloads
Working Paper: Minority Blocks And Takeover Premia (2005) Downloads
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