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The Consequence of Takeover Methods: Schemes of Arrangement vs. Takeover Offers

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  • Hala Alqobali

    (Department of Economics, Faculty of Economics and Administration, King Abdul-Aziz University KAU, Jeddah 22254, Saudi Arabia)

  • Daniel Li

    (Department of Economics, Durham University Business School, Durham University, Durham DH1 3LE, UK)

Abstract

This paper examined the effect of two selling processes in the UK market: takeover offers and schemes of arrangement. The latter is argued to allow a bidder to acquire a target company more cheaply and easily because schemes provide a lower threshold of the target company’s shares before “squeeze-out” procedures may be used. To address potential self-selection bias arising from bidders’ ability to choose their acquisition method, the propensity score matching methodology was applied to 803 takeovers of listed-target firms from 1995–2018. The results showed that the scheme of arrangement significantly reduces the target shareholders’ gain relative to the takeover offer.

Suggested Citation

  • Hala Alqobali & Daniel Li, 2022. "The Consequence of Takeover Methods: Schemes of Arrangement vs. Takeover Offers," IJFS, MDPI, vol. 10(3), pages 1-15, August.
    • Handle: RePEc:gam:jijfss:v:10:y:2022:i:3:p:69-:d:889685
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