Minority blocks and takeover premia

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Publication Details

Output type: Other

Author list: Burkart M, Gromb D, Panunzi F

Publisher: Mohr Siebeck

Publication year: 2006

Journal: Journal of Institutional and Theoretical Economics (0932-4569)

Volume number: 162

Issue number: 1

Start page: 32

End page: 49

Number of pages: 18

ISSN: 0932-4569

eISSN: 1614-0559

Languages: English-Great Britain (EN-GB)

Unpaywall Data

Open access status: green

Full text URL: http://eprints.lse.ac.uk/69546/1/Burkhart_Minority%20blocks%20and%20takeover%20premia_author_2006%20LSERO.pdf

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.

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