Working Paper No. 634

Acquisition Strategies: Empirical Evidence of Outsider-Toeholds

Published: January 24, 2005Pages: 29Keywords: Acquisition; Antitrust; Insiders’ Dilemma; Mergers; ToeholdsJEL-codes: G34; L12; L13; L41

Acquisition Strategies: Empirical Evidence of Outsider-Toeholds Tobias Lindqvist


Theoretically, cross ownership may mitigate mergers, i.e. market concentrations. Holding a share in a competing firm before the acquisition of another firm, outsider-toehold, is more profitable in some market constellations, due to the positive externality on the outsider (competing) firm when a merger occurs. The purposes of this paper are to empirically observe when US firms buy outsider-toeholds and through event-studies estimate the gains of buyers, outsider firms and competitors when firms holding outsider-toeholds merge.

 

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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