74 Pages Posted: 3 Mar 2010 Last revised: 2 Apr 2014
Date Written: April 1, 2014
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.
Keywords: Mergers and Acquisitions, Strategic Bidders, Financial Bidders, Takeover Auctions
JEL Classification: D44, G32, G34
Suggested Citation: Suggested Citation
Gorbenko, Alexander S. and Malenko, Andrey, Strategic and Financial Bidders in Takeover Auctions (April 1, 2014). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1559481 or http://dx.doi.org/10.2139/ssrn.1559481