Skip Navigation

This Article
Right arrow Full Text (PDF)
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Similar articles in ISI Web of Science
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrow Search for citing articles in:
ISI Web of Science (41)
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Betton, S.
Right arrow Articles by Eckbo, B. E.
Right arrow Search for Related Content
Related Collections
Right arrow D44 - Auctions
Right arrow G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

Rev Fin 2000; 13:841-882
© 2000 the Society for Financial Studies

Article

Toeholds, bid jumps, and expected payoffs in takeovers

S Betton1 and BE Eckbo2,z
1 Concordia University
E-mail: betton@vax2.concordia.ca
2 Tuck School at Dartmouth, Hanover, NH 03755, USA
E-mail: b.espen.eckbo@dartmouth.edu
z Corresponding author

Abstract

We estimate sequentially outcome probabilities and expected payoffs associated with first, second, and final bids in a large sample of tender offer contests. Rival bids arrive quickly and produce large bid jumps. Greater bidder toeholds (prebid ownership of target shares) reduce the probability of competition and target resistance and are associated with both lower bid premiums and lower prebid target stock price runups. The expected payoff to target shareholders is increasing in the bid premium and in the probability of competition, but decreasing in the bidder's toehold. The initial bidder's expected payoff is significantly positive in the 'rival-bidder-win' outcome, in part reflecting gains from the pending toehold sale. Despite these dramatic toehold effects, only half of the initial bidders acquire toeholds.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?


This article has been cited by other articles:


Home page
 REV FINANC STUDHome page
A. Bodnaruk, M. Massa, and A. Simonov
Investment Banks as Insiders and the Market for Corporate Control
Rev. Financ. Stud., June 8, 2009; (2009) hhp043v1.
[Abstract] [Full Text] [PDF]

Home page
 Review of FinanceHome page
M. Burkart and S. Lee
One Share - One Vote: the Theory
Review of Finance, January 9, 2008; (2008) rfm035v1.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
P. Povel and R. Singh
Takeover Contests with Asymmetric Bidders
Rev. Financ. Stud., December 1, 2006; 19(4): 1399 - 1431.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
A. B. Gillette and T. H. Noe
If at First You Don't Succeed: The Effect of the Option to Resolicit on Corporate Takeovers
Rev. Financ. Stud., June 1, 2006; 19(2): 561 - 603.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
M. M. Bange and M. A. Mazzeo
Board Composition, Board Effectiveness, and the Observed Form of Takeover Bids
Rev. Financ. Stud., October 1, 2004; 17(4): 1185 - 1215.
[Abstract] [Full Text] [PDF]


Disclaimer: Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.