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How do valuations impact outcomes of asset sales with heterogeneous bidders?

Gorbenko, AS; (2019) How do valuations impact outcomes of asset sales with heterogeneous bidders? Journal of Financial Economics , 131 (1) pp. 88-117. 10.1016/j.jfineco.2018.08.001. Green open access

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Abstract

Differences among bidder type-specific outcomes of asset sales are theoretically related to differences in bidders’ valuations and participation. The lead application to quantify these relations is takeover auctions: bidders are classified into strategic and financial, and bids are available. I structurally estimate valuations from all bids. The positive difference in premiums between strategic and financial acquirers is driven by the difference in dispersions of valuations (e.g., strategic bidders’ synergies are more dispersed) and the set of auction participants. The difference in average valuations is relatively unimportant. My approach can help explain outcomes of asset sales, even in settings with limited bidder data.

Type: Article
Title: How do valuations impact outcomes of asset sales with heterogeneous bidders?
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jfineco.2018.08.001
Publisher version: https://doi.org/10.1016/j.jfineco.2018.08.001
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.
Keywords: Mergers and acquisitions, Takeover auctions, Strategic bidders, Financial bidders, Takeover premiums
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/10105513
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