Chowdhry, Bhagwan; Nanda, Vikram - In: Journal of Finance 48 (1993) 2, pp. 731-45
In a takeover contest, the presence of bidders' existing debtholders, if they can be expropriated by issuing new debt with equal or senior priority, allows bidders to commit to bid more than their valuation of the target. Such commitment can be beneficial because it deters potential entry by...