The role of lockups in takeover contests

• 成果类型: Article
• 署名作者: Che, Yeon-Koo; Lewis, Tracy R.
• 署名单位: Columbia University; Duke University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/j.0741-6261.2007.00105.x
• 发表日期: 2007
• 页码: 648-669
• 关键词: acquisitions; target; toeholds

摘要

We examine breakup fees and stock lockups as devices for prospective target firms to encourage bidder participation in takeover contests. Unless bidding costs for the first bidder are too high, breakup fees provide for the socially desirable degree of competition and ensure the efficient allocation of the target to the highest-valued buyer in a takeover auction. In contrast, stock lockups permit the target firm to subsidize entry of a new bidder at the expense of an incumbent bidder Stock lockups induce too much competition when offered to a second bidder and too little competition when offered to a first bidder Despite their socially wasteful properties, target management would favor stock lockups, as they induce takeover competition at least cost to the target.