IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/19204.html
   My bibliography  Save this paper

Strategic Stake Acquisitions in Rival Firms: Common vs. Cross-Ownership

Author

Listed:
  • Denicolo, Vincenzo
  • Panunzi, Fausto

Abstract

This paper examines the problem of a blockholder who controls a firm and seeks to acquire a noncontrolling stake in a rival company. The blockholder can either purchase the stake directly using personal funds or indirectly, through the firm he controls. The first option results in a pattern of common ownership, while the second leads to cross-ownership. We show that common ownership reduces competition intensity more effectively than cross-ownership and allows the blockholder to retain the benefits of the acquisition without sharing them with minority shareholders. However, this may create conflicts of interest with those shareholders, whereas cross-ownership always maintains an alignment of interests. Consequently, the blockholder may prefer cross-ownership if control over his company is not secure and could be challenged by minority shareholders.

Suggested Citation

  • Denicolo, Vincenzo & Panunzi, Fausto, 2024. "Strategic Stake Acquisitions in Rival Firms: Common vs. Cross-Ownership," CEPR Discussion Papers 19204, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19204
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP19204
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Competition;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:19204. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.