The Choice Between Various Freeze-out Procedures and its Consequences
55 Pages Posted: 18 Mar 2021
Date Written: February 28, 2021
We develop a model of freeze-out merger and tender offers and test it in an economy where merger and tender regulation are extremely different. Using a relatively large sample of 329 freeze-out offers in Israel during 2000-2019, we document evidence consistent with the model. We also find that tender offers: 1) are the preferred technique; 2) offer lower premiums; and 3) suffer from a relatively large (40%) offer rejection rate. These findings deviate from U.S. evidence, and are partly due to differences in the tender offer procedures. Thus, our study illustrates that the tender offer procedure is a delicate one, and explains why Delaware has often amended it.
Keywords: Going private transactions, controlling shareholders, mergers, tender offers
JEL Classification: G32, G34, G38
Suggested Citation: Suggested Citation