Event

Takeover Duration and Negotiation Process

  • Conférencier  Riccardo Calcagno – EM Lyon

  • Lieu

    Luxembourg School of Finance Kirchberg Camous (Main Building) Salle des conseils 6, rue Richard Coudenhove-Kalergi L-1359 Luxembourg

    LU

  • Thème(s)
    Finance

Abstract

We study the determinants of takeover duration. We focus on

bidder-initiated, one-to-one negotiations. As time goes on, both

parties learn about true deal synergies due to the negotiation

process. At any moment, rival bidders can show up and compete

for the target. Using a discrete time finite horizon dynamic

programming approach, we study the equilibrium relations

between the negotiation duration, the pressure of potential

competition and the learning process. Next, we perform a

calibration exercise based on a large sample of merger

negotiations with hand-collected data from SEC filings. Our

results allow to quantify the intensity of potential competition.