The Foundations of Freezeout Laws in Takeovers (.pdf)
Why include a freeze-out provision in takeover contracts? Because if not, investors would not tender shares. How is that? Consider the Grossman-Hart (1980) view that if the takeover is in fact value maximizing, then shareholders would have an incentive to not tender their shares but to wait for the stock price to increase. Of course if shareholders knew this, then they … [ Read more ]
Content: Article | Authors: Marcel Kahan, Rangarajan K. Sundaram, Yakov Amihud | Subject: Finance | Industry: Investment Banking