The Choice Between Various Freeze-out Procedures and its Consequences

55 Pages Posted: 18 Mar 2021

See all articles by Beni Lauterbach

Beni Lauterbach

Bar-Ilan University - Graduate School of Business Administration; European Corporate Governance Institute (ECGI)

Evgeny Lyandres

Tel Aviv University

Yevgeny Mugerman

Bar Ilan University

Barak Yarkoni

Ariel University - Department of Economics and Business Administration; The Raymond Ackerman Family Chair in Israeli Corporate Governance, Bar-Ilan University

Date Written: February 28, 2021

Abstract

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

Lauterbach, Beni and Lyandres, Evgeny and Mugerman, Yevgeny and Yarkoni, Barak, The Choice Between Various Freeze-out Procedures and its Consequences (February 28, 2021). European Corporate Governance Institute – Finance Working Paper No. 735/2021, Available at SSRN: https://ssrn.com/abstract=3805706 or http://dx.doi.org/10.2139/ssrn.3805706

Beni Lauterbach (Contact Author)

Bar-Ilan University - Graduate School of Business Administration ( email )

Ramat Gan
Israel

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Evgeny Lyandres

Tel Aviv University ( email )

Ramat Aviv
Tel-Aviv, 6997801
Israel
6400241 (Fax)

Yevgeny Mugerman

Bar Ilan University ( email )

Ramat Gan
5290002
Israel

Barak Yarkoni

Ariel University - Department of Economics and Business Administration ( email )

Israel

The Raymond Ackerman Family Chair in Israeli Corporate Governance, Bar-Ilan University ( email )

Israel

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