search query: @freeterm Takeover fees / total: 2
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| Author: | Officer, M.S. |
| Title: | Termination fees in mergers and acquisitions |
| Journal: | Journal of Financial Economics
2003 : SEP, VOL. 69:3, p. 431-467 |
| Index terms: | Mergers |
| Freeterms: | Takeover fees |
| Language: | eng |
| Abstract: | The paper provides evidence on the effects of including a target termination fee in a merger contract. Tested are the implications of the hypothesis that termination fees are used by self-interested target managers to deter competing bids and protect "sweetheart" deals with white knight bidders, presumably resulting in lower premiums for target shareholders. An alternative hypothesis is that target managers use termination fees to encourage bidder participation by ensuring that the bidder is compensated for the revelation of valuable private information released during merger negotiations. Empirical evidence of the paper demonstrates that merger deals with target termination fees involve significantly higher premiums and success rates than deals without such clauses. |
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