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Strategic and Financial Bidders in Takeover Auctions

Alexander S. Gorbenko

London Business School

Andrey Malenko

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, G34

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Date posted: March 3, 2010 ; Last revised: April 2, 2014

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

Contact Information

Alexander S. Gorbenko
London Business School ( email )
Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom
+44 0 7966908276 (Phone)
HOME PAGE: http://www.stanford.edu/~gorbenko
Andrey Malenko (Contact Author)
MIT Sloan School of Management ( email )
100 Main Street
Cambridge, MA 02142
United States
617-225-9301 (Phone)
HOME PAGE: http://www.mit.edu/~amalenko
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