Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 1/2010: Mergers and Partial Ownership.

Øystein Foros (), Hans Jarle Kind () and Greg Shaffer
Additional contact information
Øystein Foros: Dept of Finance and Management Science, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway
Hans Jarle Kind: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Greg Shaffer: University of Rochester and University of East Anglia, Postal: University of Rochester and University of East Anglia

Abstract: In this paper we compare the profitability of a merger to the pro…tability of a partial ownership arrangement and …nd that partial ownership arrangements can be more profiable for the acquiring and acquired firm because they can result in a greater dampening of competition. We also derive comparative statics on the prices of the acquiring firm, the acquired firm, and the outside firms. In a dual context, we show that a cross-majority owner may have incentives to sell a fraction of the shares in one of the firms he controls to a silent investor who is outside the industry. Aggregate ex post operating profit in the two firms controlled by the cross-majority shareholder then increases, such that both the cross-majority shareholder and the silent investor will be better o¤ with than without the partial divestiture.

Keywords: Media economics; Mergers; Corporate Control; Financial Control

JEL-codes: L13; L22; L82

20 pages, January 21, 2010

Full text files

DWSDownload.aspx?Fil...pers%2f2010%2f01.pdf PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Karen Reed-Larsen ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2020-02-16 18:56:54.