The Role of Institutional Investors in Public-to-Private Transactions

Posted: 6 Jul 2013 Last revised: 19 Oct 2013

See all articles by Emanuele Bajo

Emanuele Bajo

University of Bologna - Department of Management

Massimiliano Barbi

University of Bologna - Department of Management

Marco Bigelli

University of Bologna - Department of Management

David Hillier

University of Strathclyde - Department of Accounting and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: July 5, 2013

Abstract

In Italy, as in many other European countries, listed firms will normally go dark through controlling owner-initiated tender offers. We find that institutional investors play a central role in the bid process and can protect minority shareholders from being frozen out in the bid. Specifically, tender offers are less likely to succeed when a firm has institutional investors in its ownership structure. When public-to-private offers are accepted, bid premiums are significantly greater if a financial institution (particularly when it is foreign, independent or activist) has a stake in the firm. We explore the effect of a number of hitherto unexplored factors on the takeover premium and find that shareholder agreements facilitate public-to-private acquisitions. Other factors, such as a threat to merge the target if the bid fails, or external validation of the offer price, have no impact on either the likelihood of delisting or the premium paid by the bidder.

Keywords: Public-to-private transactions, Delisting, Family firms, Tender offer

JEL Classification: G32, G34

Suggested Citation

Bajo, Emanuele and Barbi, Massimiliano and Bigelli, Marco and Hillier, David, The Role of Institutional Investors in Public-to-Private Transactions (July 5, 2013). Journal of Banking and Finance, Vol. 37, pp. 4327-4336, 2013. Available at SSRN: https://ssrn.com/abstract=2290483

Emanuele Bajo

University of Bologna - Department of Management ( email )

Via Capo di lucca, 34
Bologna, 40126
Italy
+39 051 209 8091 (Phone)
+39 051 246411 (Fax)

Massimiliano Barbi

University of Bologna - Department of Management ( email )

via Capo di Lucca 34
Bologna, 40126
Italy
+39 051 2098404 (Phone)
+39 051 246411 (Fax)

HOME PAGE: http://www.sites.google.com/site/massimilianobarbifinance/

Marco Bigelli (Contact Author)

University of Bologna - Department of Management ( email )

Via Capo di Lucca 34
Bologna, 40126
Italy
+39 051 2098060 (Phone)
+39 051 6390612 (Fax)

David Hillier

University of Strathclyde - Department of Accounting and Finance ( email )

Curran Building
100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 330 4809 (Phone)
44 0141 330 4442 (Fax)

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