EconPapers    
Economics at your fingertips  
 

Takeover Contests, Toeholds and Deterrence

David Ettinger ()

Post-Print from HAL

Abstract: We consider a setting in which two potential buyers, one with a prior toehold and one without, compete in a takeover modeled as an ascending auction with participating costs. The toeholder is more aggressive during the takeover process because she is also a seller of her own shares. The non-toeholder anticipates this extra-aggressiveness of the toeholder. Thus, he is deterred from participating unless he has a high valuation for the target company. This leads to large inefficiency losses. For many configurations, expected target returns are first increasing then decreasing in the size of the toehold.

Keywords: Takeovers; ascending auctions; toeholds; deterrence (search for similar items in EconPapers)
Date: 2009
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00702428
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Published in Scandinavian Journal of Economics, Wiley, 2009, 111 (1), pp.103-124

Downloads: (external link)
https://hal.archives-ouvertes.fr/hal-00702428/document (application/pdf)

Related works:
Journal Article: Takeover Contests, Toeholds and Deterrence (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00702428

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2020-09-22
Handle: RePEc:hal:journl:hal-00702428