Takeover attempts from raiders with prior stakes in the target company (toeholds) are frequent in the market for corporate control. In this context, we propose a simple and realistic selling mechanism with an agenda of exclusive negotiations that discriminates against larger-toehold raiders....

This paper proposes and tests an explanation as to why rational managers seeking to maximize shareholder value can pursue value-decreasing mergers. It can be optimal to overpay for a target firm and decrease shareholder value if the loss is less than in an alternative where the merger is...

This paper presents a short survey of theoretical research in takeover auctions. It concentrates on the models of preemptive jump bidding and the effect of toeholds as well as the models that investigate the combination of these two effects

We examine the method by which firms are sold, auctions or one-on-one negotiations. We define and describe a subset of transactions that result from auction failure (i.e., target-attempted auctions that secure only one bidder). Controlling for endogeneity, firm, and transaction specific...

In light of recent developments in auction theory, this Article re-examines Delaware corporate law governing directors' actions when structuring the sale of a corporation. A foundational doctrine of Delaware law is that when the board of directors resolves to sell a corporation, it must obtain...

We study how common ownership among potential acquirers influences the firm selling process. We find that, when potential acquirers share a common owner, the target firm is more likely to be sold through auction rather than negotiation with a single acquirer. The presence of common owner does...

Inspired by some spectrum auctions, we consider a stylized license auction with incumbents and one entrant. Whereas the entrant values only the bundle of several units (synergy), incumbents are subject to non-increasing demand. The seller proactively encourages entry and restricts incumbent...

We study for a sample of international mergers and acquisitions the effectiveness of three takeover bidding strategies first in preventing bidder contests and second, if a contest has occurred, in increasing the probability of a successful offer. Our results indicate that support for the...

Using data on auctions of companies, we estimate valuations (maximum willingness to pay) of strategic and financial bidders from their bids. We find that a typical target is valued higher by strategic bidders. However, 22.4% of targets in our sample are valued higher by financial bidders. These...