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

M. Bugeja, Raymond da Silva Rosa, H. Y. Izan, S. Ngan

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

© 2015, © The Author(s) 2015.
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.
Original languageEnglish
Pages (from-to)212-243
JournalAustralian Journal of Management
Volume41
Issue number2
Early online date16 Apr 2015
DOIs
Publication statusPublished - 1 May 2016

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Bid
Premium
Ownership concentration
Corporate control
Firm ownership
Shareholders
Empirical evidence
Leverage
Criticism
Toehold
Self-selection

Cite this

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To scheme or bid? Choice of takeover method and impact on premium. / Bugeja, M.; da Silva Rosa, Raymond; Izan, H. Y.; Ngan, S.

In: Australian Journal of Management, Vol. 41, No. 2, 01.05.2016, p. 212-243.

Research output: Contribution to journalArticle

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