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Strategic and Financial Bidders in Takeover Auctions

Gorbenko, AS; Malenko, A; (2014) Strategic and Financial Bidders in Takeover Auctions. The Journal of Finance , 69 (6) pp. 2513-2555. 10.1111/jofi.12194. Green open access

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Abstract

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 are mature, poorly performing companies. We also find that (i) valuations of different strategic bidders are more dispersed and (ii) valuations of financial bidders are correlated with aggregate economic conditions. Our results suggest that different targets appeal to different types of bidders, rather than that strategic bidders always value targets more because of synergies.

Type: Article
Title: Strategic and Financial Bidders in Takeover Auctions
Open access status: An open access version is available from UCL Discovery
DOI: 10.1111/jofi.12194
Publisher version: https://doi.org/10.1111/jofi.12194
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management
URI: https://discovery.ucl.ac.uk/id/eprint/10104962
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