Working Paper Series
Acquisiton Strategies: Empirical Evidence of Outsider-Toeholds
Abstract: Theoretically, cross ownership may mitigate mergers, i.e.
market concentrations. Holding a share in a competing firm before the
acquisition of another firm, outsider-toehold, is more profitable in some
market constellations, due to the positive externality on the outsider
(competing) firm when a merger occurs. The purposes of this paper are to
empirically observe when US firms buy outsider-toeholds and through
event-studies estimate the gains of buyers, outsider firms and competitors
when firms holding outsider-toeholds merge.
Keywords: Acquisition; Antitrust; Insiders’ Dilemma; Mergers; Toeholds; (follow links to similar papers)
JEL-Codes: G34; L12; L13; L41; (follow links to similar papers)
29 pages, January 24, 2005
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