Partial Takeovers: Are They Coercive?

Abstract

Considerable publicity has been given to the call for further regulating partial takeover bids in Australia. This call is largely based on a premise that they coerce shareholders into accepting a takeover offer which will decrease their wealth. An alternate argument is that in a competitive market for corporate control partial takeovers will increase the wealth of shareholders, not decrease it. In this paper, data reported in the Companies and Securities Law Review Committee's Discussion Paper No. 2 is extended and evaluated in a conceptual framework. The evidence is consistent with partial takeovers being shareholder-wealth-increasing events.