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Incentives for Partial Acquisitions and Real Market Concentration

Patricia Charléty, Marie-Cecile Fagart and Saïd Souam ()
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Patricia Charléty: CEPN - Centre d'Economie de l'Université Paris Nord (ancienne affiliation) - UP13 - Université Paris 13 - CNRS - Centre National de la Recherche Scientifique

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Abstract: We analyze the incentives of a controlling shareholder of a firm to acquire, directly or indirectly through his firm, shares in a competitor. We charaterize the conditions under which these partial acquisitions as well as the equilibrium toehold and its nature: controlling or silent. We find that while this shareholder gains, the acquisition is detrimental to minority shareholders of his firm, or of the target, or even of both. We show that the incentives are enhanced if the dominant shareholder initially holds silent stakes in rivals while controlling interests may discourage them. Moreover, we find that partial acquisitions always lead to a decrease in the joint profit of the two firms involved, and an increase in competitor's profits as the market becomes less competitive.

Keywords: silent interests; horizontal partial acquisitions; real market concentration; dominant shareholder; minority shareholders; silent interests. (search for similar items in EconPapers)
Date: 2007-05-05
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00143911
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Journal Article: Incentives for Partial Acquisitions and Real Market Concentration (2009) Downloads
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