The Choice Between Various Freeze-out Procedures and its Consequences

The Choice Between Various Freeze-out Procedures and its Consequences

Beni Lauterbach, Evgeny Lyandres, Yevgeny Mugerman, Barak Yarkoni

Series number :

Serial Number: 
735/2021

Date posted :

March 18 2021

Last revised :

March 18 2021
SSRN Share

Keywords

  • Going private transactions • 
  • controlling shareholders • 
  • Mergers • 
  • tender offers

We develop a model of freeze-out merger and tender offers and test it in an economy where merger and tender regulation are extremely different. Using a relatively large sample of 329 freeze-out offers in Israel during 2000-2019, we document evidence consistent with the model.

We also find that tender offers: 1) are the preferred technique; 2) offer lower premiums; and 3) suffer from a relatively large (40%) offer rejection rate. These findings deviate from U.S. evidence, and are partly due to differences in the tender offer procedures. Thus, our study illustrates that the tender offer procedure is a delicate one, and explains why Delaware has often amended it.

Authors

Real name:
Evgeny Lyandres
Real name:
Yevgeny Mugerman
Real name:
Barak Yarkoni