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To scheme or bid? Choice of takeover method and impact on premium
Journal article   Peer reviewed

To scheme or bid? Choice of takeover method and impact on premium

M. Bugeja, R. da Silva Rosa, H. Izan and S. Ngan
Australian Journal of Management, Vol.41(2), pp.212-243
2016
DOI: https://doi.org/10.1177/0312896214565120
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Abstract

In recent years there has been an increasing use of members’ schemes of arrangement to bring about a change in corporate control. This increasing use of schemes has been criticised in public quarters on the basis that unlike takeovers, schemes are not subject to the Eggleston principles and have arguably led to target shareholders receiving lower offer prices. This study provides the first large-sample empirical evidence on differences between schemes and takeovers. We find that the likelihood of the use of schemes significantly increases when target firm ownership concentration is higher and when the bidder has a lower toehold. Scheme usage is also more likely for larger targets and bidders with higher leverage. Consistent with public criticisms of schemes, we find that after controlling for self-selection premiums in schemes are significantly lower than those in takeovers

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Collaboration types
Domestic collaboration
Citation topics
6 Social Sciences
6.10 Economics
6.10.63 Corporate Governance
Web Of Science research areas
Business
Management
ESI research areas
Economics & Business
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