Article - post-print
Tender offers provide the advantage of substantially faster completion times than mergers. However, a tender offer signals to the target higher demand for its shares and raises its reservation price. In equilibrium, bidders tradeoff speed and cost. Consistent with this theory, we show that deals in more competitive environments and deals with fewer external impediments on execution are more likely to be structured as tender offers. Tender offers also require higher premiums than mergers. Finally, the rivals of the bidding firm realize significantly lower announcement returns and subsequent operating performance in tender offers than in mergers.
This is an author-manuscript of an article accepted for publication in Journal of Financial Economics following peer review. The version of record is available online at: http://dx.doi.org/10.1016/j.jfineco.2015.02.006.
Offenberg, David and Pirinsky, Christo. 2015."ow do acquirers choose between mergers and tender offers?," Journal of Financial Economics 116(2), 331-348. http://dx.doi.org/10.1016/j.jfineco.2015.02.006.