AFFI International Conference 2017

Full Program »

"She is Mine": Determinants and Value Eff ects of Early Announcements in Takeovers

View File

Some bidders voluntarily announce a merger negotiation before the definitive agreement. We propose an “announce-to-signal” explanation to these early announcements: they allow bidders to signal to target shareholders high synergies so as to overcome negotiation frictions and improve success rates. We show that there exists a separating equilibrium where high-synergy bidders announce early, while low-synergy bidders remain in private negotiations. Consistent with signaling, we show that negotiation frictions predict earlier announcements. Early announced transactions are associated with higher expected synergies, offer premium, completion rates, and public competition. However, bidder announcement returns do not suggest overpayment in these transactions.


Nihat Aktas    
WHU - Otto Beisheim School of Management

Guosong Xu    
WHU - Otto Beisheim School of Management

Burcin Yurtoglu    
WHU - Otto Beisheim School of Management


Powered by OpenConf®
Copyright©2002-2016 Zakon Group LLC