Takeover deterrents and Cross Partial Ownerships: the case of golden shares

Serbera, Jean-Philippe; Fry, John

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.

Citation

Serbera, J.-P., & Fry, J. (2019). Takeover deterrents and Cross Partial Ownerships: the case of golden shares. Managerial and decision economics : MDE, 40(3), 243-250. https://doi.org/10.1002/mde.2998

• Journal Article Type: Article
• Acceptance Date: Nov 30, 2018
• Online Publication Date: Jan 28, 2019
• Publication Date: 2019-04
• Deposit Date: Feb 4, 2022
• Journal: Managerial and decision economics : MDE
• Print ISSN: 0143-6570
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 40
• Issue: 3
• Pages: 243-250
• DOI: https://doi.org/10.1002/mde.2998
• Keywords: Takeovers; Partial ownership; Mergers; Market power
• Public URL: https://hull-repository.worktribe.com/output/3921048
• Related Public URLs: http://shura.shu.ac.uk/23979/