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Pré-Publication, Document De Travail Année : 2023

Strategic Toeholds in Takeovers

Résumé

Theoretical literature predicts that raiders should hold part of the shares - a so-called toehold - before a takeover operation. Whereas theoretical results predict that the toehold should be maximal, empirical results reveals heterogeneity in the observed levels of toeholds. Our study explains this gap. We develop a tender o↵er model with atomistic target shareholders and asymmetric information. We find that it is optimal to acquire a toehold prior to the announcement of the takeover and we determine the optimal level of the toehold. Some particular environments may reduce the optimal level of toeholds: strong dilution mechanisms, soft financial constraints for the bidder, low financial frictions, a high legal protection for investors and not all-cash payment methods. We provide empirical evidence that support our predictions.
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Dates et versions

hal-04604654 , version 1 (07-06-2024)

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  • HAL Id : hal-04604654 , version 1

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Herve Alexandre, Christian At, Catherine Refait-Alexandre. Strategic Toeholds in Takeovers. 2023. ⟨hal-04604654⟩
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