Real Market Concentration through Partial Acquisitions
We study horizontal partial acquisitions in an oligopolistic industry in the absence of synergies.Contrary to existing results, we …nd that a dominant shareholder may choose to acquire sharesin a competitor although the aggregate pro…t of the group of …rms under his control, and eventhe greater group of …rms in which he has a stake, is reduced. This is due to a “favorite” e¤ect:after the acquisition, the dominant shareholder will favor the …rm in which he eventually holdsthe relatively higher share to the detriment of shareholders of the other …rms. For this reason, ablock of shares can be bought at a discount when the value of the …rm of the initiator decreasespost acquisition. Moreover, we show that the existence of initial silent toeholds in rivals enhancesthe incentive for a dominant shareholder to buy shares in other …rms in the industry, whereascontrolling ones may discourage them.
Year of publication: |
2004
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Authors: | Charletty, Patricia ; Fagart, Marie-Cécile ; Souam, Saïd |
Institutions: | Centre de Recherche en Économie et Statistique (CREST), Groupe des Écoles Nationales d'Économie et Statistique (GENES) |
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