Do Shareholder Tender Agreements Inform or Expropriate Shareholders?

56 Pages Posted: 24 Oct 2006 Last revised: 24 Apr 2011

See all articles by Leonce Bargeron

Leonce Bargeron

University of Kentucky - Gatton College of Business and Economics

Date Written: September 26, 2006

Abstract

By signing a Shareholder Tender Agreement (STA) a shareholder pre-commits to tender her shares to a particular bidder, forsaking the right to tender to any subsequent bidder. In a representative sample of tender offers between 1995 and 2007, 60% of the offers contain an STA. STA deals are associated with lower premiums, greater ownership concentration, greater management ownership, and greater information asymmetry. The results support the hypothesis that STAs certify value to uninformed shareholders, thereby increasing the efficiency of the tender offer process. The evidence does not support the view that STAs expropriate value from shareholders of target companies.

Keywords: Tender offer, Merger, Asymmetric information, Certification, Bid premium

JEL Classification: G34, D82

Suggested Citation

Bargeron, Leonce, Do Shareholder Tender Agreements Inform or Expropriate Shareholders? (September 26, 2006). Available at SSRN: https://ssrn.com/abstract=939747 or http://dx.doi.org/10.2139/ssrn.939747

Leonce Bargeron (Contact Author)

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States
859-257-4397 (Phone)

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