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Takeover deterrents and cross partial ownership: the case of golden shares
Serbera, J-P. Fry, John
Serbera, J-P.
Fry, John
Publication Date
2019-04
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© 2019 John Wiley & Sons, Ltd. This is the peer reviewed version of the following article: Serbera J-P and Fry J (2019) Takeover deterrents and cross partial ownership: the case of golden shares. Managerial and Decision Economics. 40(3): 243-250, which has been published in final form at https://doi.org/10.1002/mde.2998. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
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openAccess
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30/11/2018
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Abstract
We analyse takeovers in an industry with bilateral capital‐linked firms in cross partial ownership (CPO). Before merger, CPO reduces the profitability of involved firms, confirming the “outsider effect.” However, the impact of CPO upon merger profitability is two‐sided in a Cournot setting. CPO, by cointegrating profits, increases output collusion leading to anticompetitive effects with facilitated mergers in most cases. Nonetheless, a protective threshold exists for which CPO arrangements can reduce the incentives for hostile takeovers. This has potentially significant regulatory implications. An illustrative example showcases the potential relevance of CPO as a defence against hostile takeovers across different industries.
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Citation
Serbera J-P and Fry J (2019) Takeover deterrents and cross partial ownership: the case of golden shares. Managerial and Decision Economics. 40(3): 243-250.
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