Strategic and Financial Bidders in Takeover Auctions
Alexander S. Gorbenko
London Business School
MIT Sloan School of Management
April 1, 2014
Journal of Finance, Forthcoming
Using data on auctions of companies, we estimate valuations (maximum willingness to pay) of strategic and financial bidders from their bids. We find that a typical target is valued higher by strategic bidders. However, 22.4% of targets in our sample are valued higher by financial bidders. These are mature poorly-performing companies. We also find that (i) valuations of different strategic bidders are more dispersed, (ii) valuations of financial bidders are correlated with aggregate economic conditions. Our results suggest that different targets appeal to different types of bidders, rather than that strategic bidders always value targets more because of synergies.
Number of Pages in PDF File: 74
Keywords: Mergers and Acquisitions, Strategic Bidders, Financial Bidders, Takeover Auctions
JEL Classification: D44, G32, G34Accepted Paper Series
Date posted: March 3, 2010 ; Last revised: April 2, 2014
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