The information content of post tender offer movement in the price of target shares

Mergers and Acquisitions

“…This model is an imperfect representation of the target pricing process. It appears to work well when applied to targets of takeover bids that are ultimately successful, but it tends to overestimate the likelihood of success for targets of failed bids (see Zissu, 1989;Hutson, 2000). This is probably because the likelihood of a subsequent bid is an important additional determinant of the price of stocks subject to takeover bids that fail (see Bradley, 1980;Bradley et al, 1983;Fabozzi et al, 1988).…”