Transfers of Corporate Control in Firms with Non-Controlling Blockholders

64 Pages Posted: 23 Nov 2012 Last revised: 17 Nov 2017

See all articles by Sergey Stepanov

Sergey Stepanov

National Research University Higher School of Economics - Faculty of Economics; National Research University Higher School of Economics - International College of Economics and Finance

Date Written: November 15, 2017

Abstract

I model the choice between a negotiated block trade and a public tender offer as means of acquiring control in a firm with a large minority blockholder. Potential acquirers differ in their (privately known) value-creation ability. In equilibrium, block trades are made by lower ability acquirers compared to tender offers. The equal opportunity rule (EOR) and the "freezeout" rule are complements in promoting efficiency of control transfers. Stronger investor protection may hamper value-increasing takeovers when the EOR is present. The model also delivers predictions about announcement returns and the incidence of block trades and tender offers under different legal regimes.

Keywords: takeovers, block trades, tender offers, investor protection, equal opportunity rule, freezeouts

JEL Classification: D82, G34

Suggested Citation

Stepanov, Sergey, Transfers of Corporate Control in Firms with Non-Controlling Blockholders (November 15, 2017). Available at SSRN: https://ssrn.com/abstract=2179626 or http://dx.doi.org/10.2139/ssrn.2179626

Sergey Stepanov (Contact Author)

National Research University Higher School of Economics - Faculty of Economics ( email )

Shabolovka 26
Moscow, 119049
Russia

National Research University Higher School of Economics - International College of Economics and Finance ( email )

Pokrovski Bulvar 11, Korpus Zh, Office 715
Moscow, 109028
Russia

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