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White Knights and Black Knights - Does the Search for Competitive Bids Always Benefit the Shareholders of 'Target' Companies?

18 Pages Posted: 23 Apr 2007 Last revised: 31 Dec 2015

Federico M. Mucciarelli

University of London, SOAS, Department of Financial and Management Studies; University of Modena and Reggio Emilia - School of Economics

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Abstract

According to the EC Directive on Takeover Bids, defensive measures should be authorised by the general meeting of the target company. The incumbent board can, nonetheless, search for a competing bid, a so-called white knight. The rationale underpinning this exception is that competing bids always benefit target's shareholders. In this paper I will tackle this rationale, arguing that even competing bids could generate a pressure to tender on target's shareholders and, therefore, in this case should not be considered as a benefit for them.

Suggested Citation

Mucciarelli, Federico M., White Knights and Black Knights - Does the Search for Competitive Bids Always Benefit the Shareholders of 'Target' Companies?. European Company and Financial Law Review, Vol. 3, No. 4, 2006. Available at SSRN: https://ssrn.com/abstract=981399

Federico M. Mucciarelli (Contact Author)

University of London, SOAS, Department of Financial and Management Studies ( email )

Thornhaugh Street
London, WC1H 0XG
United Kingdom

University of Modena and Reggio Emilia - School of Economics ( email )

Viale Berengario 51
Modena, 41100
Italy

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