Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30679
Authors: 
Foros, Øystein
Kind, Hans Jarle
Shaffer, Greg
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper 2912
Abstract: 
In this paper we compare the profitability of a merger to the profitability of a partial ownership arrangement and find that partial ownership arrangements can be more profitable for the acquiring and acquired firm because they can result in a greater dampening of competition. We also derive comparative statics on the prices of the acquiring firm, the acquired firm, and the outside firms. In a dual context, we show that a cross-majority owner may have incentives to sell a fraction of the shares in one of the firms he controls to a silent investor who is outside the industry. Aggregate ex post operating profit in the two firms controlled by the cross-majority shareholder then increases, such that both the cross-majority shareholder and the silent investor will be better off with than without the partial divestiture.
Subjects: 
media economics
mergers
corporate control
financial control
JEL: 
L13
L22
L82
Document Type: 
Working Paper

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