European Business Schools Librarian's Group

ESSEC Working Papers,
ESSEC Research Center, ESSEC Business School

No DR 04004: Real market concentration through partial acquisitions

Patricia Charléty-Lepers (), Marie-Cécile Fagart () and Saïd Souam ()
Additional contact information
Patricia Charléty-Lepers: ESSEC Business school, Postal: ESSEC Bibliothèque, Avenue Bernard Hirsch - B.P. 50105, 95021 CERGY-PONTOISE CEDEX , FRANCE,
Marie-Cécile Fagart: University of Rouen and CREST-LEI (Center for Research in Economics and Statistics-Laboratory of industrial economics), Postal: 28 rue des Saints Pères, 75007 Paris, FRANCE
Saïd Souam: University of Tours and CREST-LEI (Center for Research in Economics and Statistics-Laboratory of industrial economics), Postal: 28 rue des Saints Pères, 75007 Paris, FRANCE

Abstract: We study horizontal partial acquisitions in an oligopolistic industry in the absence of synergies. Contrary to existing results, we find that a dominant shareholder may choose to acquire shares in a competitor although the aggregate profit of the group of firms under his control, and even the greater group of firms in which he has a stake, is reduced. This is due to a “favorite” effect: after the acquisition, the dominant shareholder will favor the firm in which he eventually holds the relatively higher share to the detriment of shareholders of the other firms. For this reason, a block of shares can be bought at a discount when the value of the firm of the initiator decreases post acquisition. Moreover, we show that the existence of initial silent toeholds in rivals enhances the incentive for a dominant shareholder to buy shares in other firms in the industry, whereas controlling ones may discourage them.

Keywords: Horizontal partial acquisitions; Real market concentration; Dominant shareholder; Minority shareholders; Silent interests

JEL-codes: D23; D43; G32; G34

32 pages, May 2004

Full text files 

showDeclFileRes.do?declId=4963&key=__workpaper__ PDF-file

Download statistics

Questions (including download problems) about the papers in this series should be directed to Sophie Magnanou ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:ebg:essewp:dr-04004This page generated on 2024-10-19 15:41:33.