School of Business publications portal
This portal is no longer updated. Aalto University School of Business Master's Theses are now in the Aaltodoc publication archive (Aalto University institutional repository)
School of Business | Department of Finance | Finance | 2011
Thesis number: 12713
Determinants of takeover success and the role of investor protection in cross-border tender offers
Author: Puolakka, Anssi
Title: Determinants of takeover success and the role of investor protection in cross-border tender offers
Year: 2011  Language: eng
Department: Department of Finance
Academic subject: Finance
Index terms: rahoitus; financing; yrityskaupat; corporate acquisitions; tarjous; bidding; corporate governance; corporate governance
Pages: 99
Full text:
» hse_ethesis_12713.pdf pdf  size:997 KB (1020672)
Key terms: Acquisition, takeover, tender offer, reference point, corporate governance, investor protection

In this thesis I examine tender offers and the determinants which significantly affect their outcome. The focus is on revealing the determinants which help acquirers anticipate the outcome of the offer already before the offer is announced. First, I attempt to find the deal specific determinants which most significantly affect the outcome of tender offers. The second objective of this paper is to measure the country-level differences in investor protection and the effects of these differences to the outcome of the offer. In addition, I try to alleviate the ambiguity relating to the effect of the tender offer premium offered to the shareholders by adding a variable whether the offer price exceeds the target 52-week high price. I also study the determinants in special situations such as hostile and competed offers.


A sample of 3783 tender offers from 38 countries was gathered from SDC Platinum. The sample included offers announced and completed during the time period spanning from 1986 to 2010. Supplementary stock price data was collected from Thomson ONE Banker. The investor protection measures, the anti-director rights index used as a proxy for shareholder protection and the creditor rights index are from the papers by Spamann (2010) and Djankov et al. (2007), respectively. The measures for law enforcement and the level of corruption are obtained from World Bank databases. Logistic regression method was used to analyze the data.


Shareholder protection is found to have no effect on the outcome of the offer which adds to the findings of Spamann (2010). High level of creditor rights in the target country decreases the probability of success. Hostile attitude and competition among bidders are found to be the most significant determinants of tender offer success. Both have a negative effect on the outcome. I find the one week offer premium to have a positive impact of the outcome of a tender offer. The effect fades when the variable for offer price exceeding the target 52-week high is added. This confirms that after exceeding a certain level the significance of the premium is low. Contrary to previous findings toeholds are found to have a significant impact only in hostile offers.
Electronic publications are subject to copyright. The publications can be read freely and printed for personal use. Use for commercial purposes is forbidden.