A note on unsuccessful tender offers and stockholder returns

Article Abstract:

Recent research shows that unsuccessful tender offers may affect target share returns for two years past the offer's announcement. This note examines target returns in the interim between the announcement and one year after the offer's withdrawal. Analyzing a recent sample of targets that did not get another bid in the year following a failed tender offer, this study reaches two conclusions. First, all of an offer's premium disappears by the time failure becomes public. Second, excess returns are zero in the post-failure year. An explanation that is based on the causes of the tender offer's failures is presented. (Reprinted by permission of the publisher.)

Stocks

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How target shareholders benefit from value-reducing defensive strategies in takeovers

Article Abstract:

This paper shows that target shareholders can be made better off through the use of certain types of defensive strategies that reduce the value of the target by different amounts for different bidders. In many cases, simply the threat of such strategies can make target shareholders better off. Therefore, empirical tests based on stock price reactions at the adoption of defensive strategies may be underestimating the effect of such strategies. The paper also identifies the necessary characteristics that make these strategies effective and shows that many observed defenses possess similar properties. (Reprinted by permission of the publisher.)

Corporate anti-takeover measures, Antitakeover strategies

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Takeovers of privately held targets, methods of payment, and bidder returns

Article Abstract:

We examine bidder returns at the announcement of a takeover proposal when the target firm is privately held. In stock offers, bidders experience a positive abnormal return, which contrasts with the negative abnormal return typically found for bidders acquiring a publicly traded target. On the other hand, bidders experience no abnormal return in cash offers. Our analysis suggests that the positive wealth effect is related to monitoring activities by target shareholders and, to an extent, reduced information asymmetries. (Reprinted by permission of the publisher.)

Private companies

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