Privately and Socially Optimal Take-Overs when Acquisition and Exclusion Strategies are Endogenous

18 Pages Posted: 2 Mar 2007

See all articles by Piet Sercu

Piet Sercu

FEB at KU Leuven

Tom Vinaimont

Nazarbayev University - Graduate School of Business

Date Written: August 2006

Abstract

The case for one share/one vote regulation is quite robust to the way the takeover game is played, provided one goes all the way and allows not just toeholds or multiple bids and revisions but also bargaining. But the alternative rule that exclusion should never harm the non-voting shares, or that these shares should be taken over at the pre-bid price, will do equally well, without so severely curtailing a firm's room for security design. Under either rule, all privately beneficial takeovers are socially desirable and vice versa, and the value gains are shared fairly between the current shareholders and the bidder.

Keywords: Corporate Control, Security Design, Takeovers.

JEL Classification: G32, G34

Suggested Citation

Sercu, Piet M. F. A. and Vinaimont, Tom, Privately and Socially Optimal Take-Overs when Acquisition and Exclusion Strategies are Endogenous (August 2006). Available at SSRN: https://ssrn.com/abstract=967594 or http://dx.doi.org/10.2139/ssrn.967594

Piet M. F. A. Sercu (Contact Author)

FEB at KU Leuven ( email )

Naamsestraat 69
Faculty of Economics and Business
Leuven, 3000
Belgium
+32 16 32 67 56 (Phone)
+32 16 32 67 32 (Fax)

Tom Vinaimont

Nazarbayev University - Graduate School of Business ( email )

Kazakhstan

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