Controlling Shareholders and the Acquisition Premiums Paid in European Takeover Bids

M.F. Thraya (1) , J. Hagendorff (2)

1 CERAG - Centre d'études et de recherches appliquées à la gestion
2 Edin. - University of Edinburgh

This paper examines the incentives of controlling shareholders in the market for corporate control. We investigate the takeover premiums paid by a sample of European acquiring firms with concentrated voting rights structures. The results show a positive relationship between takeover premiums and the bidder's concentration of both voting rights and excess voting rights over cash-flow rights. With higher levels of bidder entrenchment, the valuation of a takeover target increasingly reflects the private benefits of control which bidders seek to extract from a deal

Keywords: Controlling shareholders; separation between the ownership and the control; takeover premiums; private benefits

Domains: Business administration

M.F. Thraya, J. Hagendorff. Controlling Shareholders and the Acquisition Premiums Paid in European Takeover Bids. 2010. ⟨halshs-00534763⟩