Mergers by Partial Acquisition

Tobias Lindqvist ()

No 630, Working Paper Series from Research Institute of Industrial Economics

Abstract: This paper evaluates partial acquisition strategies. The model allows for buying a share of a firm before the actual acquisition takes place. Holding a share in a competing firm before the acquisition of another firm, outsider-toehold, eliminates the insiders' dilemma, i.e. profitable mergers do not occur. This strategy may thus be more profitable for a buyer than acquiring entire firms at once. Furthermore, the insiders' dilemma arises from the assumption of a positive externality on the outsider firm and acquiring an outsider-toehold is thus a signal of an anti-competitive merger.

Keywords: Acquisition; Antitrust; Insiders' Dilemma; Mergers; Toeholds (search for similar items in EconPapers)
JEL-codes: G34 L12 L13 L41 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2004-10-20
New Economics Papers: this item is included in nep-com, nep-fin and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0630

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