Comparative study of complete tender offers and partial acquisitions

This paper compares and contrasts complete tender offers with partial acquisitions to assess the benefits derived from delisting and the elimination of agency costs associated with minority shareholders. The sample comprises 160 successful tender offers consummated on the Toronto Stock Exchange from...

Full description

Saved in:
Bibliographic Details
Published in:Journal of banking & finance 1993-12, Vol.17 (6), p.1097-1110
Main Authors: Amoako-Adu, Ben, Smith, Brian
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Buyout
Comparative studies
Complete tender offers
Economic models
Partial acquisitions
Rates of return
Statistical analysis
Stockholders
Tender offers
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper compares and contrasts complete tender offers with partial acquisitions to assess the benefits derived from delisting and the elimination of agency costs associated with minority shareholders. The sample comprises 160 successful tender offers consummated on the Toronto Stock Exchange from 1977 to 1989. The empirical evidence indicates that, after controlling for other factors, target shareholders receive significantly higher returns in complete tender offers compared to partial acquisitions. On the announcement day, target shareholders of complete tender offers gain 21.90% while those of partial acquisitions gain 12.80%. The results also show that cash offers increase returns in complete tender offers. There is weak evidence that the gains to target shareholders in partial acquisitions are positively related to increases in bidder ownership. Further analysis indicates that there is no significant difference in target shareholder gains for a subsample of going private transactions compared to buyouts by outside shareholders.
ISSN:0378-4266
1872-6372
DOI:10.1016/0378-4266(93)90015-6