Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86699
Authors: 
Calcagno, Riccardo
Falconieri, Sonia
Year of Publication: 
2008
Series/Report no.: 
Tinbergen Institute Discussion Paper 08-118/2
Abstract: 
We analyze the dynamics of takeover contests where hostile raiders compete against white knights involved by a lead blockholder of the target firm (the incumbent). We assume that the incumbent has the power to bargain with the potential bidders to set a minimum takeover price. We characterize the conditions under which a white knight wins the takeover contest despite the smaller value of its synergies as compared to those of the hostile bidder. The paper provides a new explanation for the reason why we observe so few hostile takeovers in reality; moreover, it sheds some light on the effectiveness of white knights as an anti-takeover device and the role played by leading minority blockholders in the market for corporate control.
Subjects: 
Hostile takeovers
white knights
Nash bargaining
JEL: 
D44
G34
Document Type: 
Working Paper

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