Determinants and shareholder wealth effects of the sales method in acquisitions

• Published in: Journal of banking & finance Vol. 59; pp. 469 - 485
• Main Authors: Schlingemann, Frederik, Wu, Hong
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.10.2015; Elsevier Sequoia S.A
• Subjects: Acquisitions; Acquisitions & mergers; Auctions; Bidders; Negotiations; Rates of return; Sales method; Shareholders wealth; Studies; Acquisitions; G34; Auctions; G30; Sales method; Negotiations

We analyze the sales method for a sample of 575 acquisitions announced between 1998 and 2012 and find that targets choose auctions to maximize the target takeover premium through greater competition and to relax their financial constraints. Auctions, compared to negotiated deals, are associated with...