CHAPTER 18
Takeover Strategies
INTRODUCTION
Takeover strategies are a function of several factors including macroeconomic and capital market conditions, acquirer's motivations and strategic objectives, expected synergies from the deal, and acquirer's beliefs about potential competition and outcome of the takeover process. Many researchers view the takeover process as a game between two players—the acquirer and the target—with the potential for entry of other players such as rival bidders, regulators, and other market participants. Other scholars characterize takeovers in a specialized, two-party auction setting. In either event, the path adopted by acquirers in pursuing potential takeover targets is likely to be a function of many related factors.
The framework adopted here covers the three components of an acquirer's strategies that correspond to the sequence of events associated with takeovers: antecedents, characteristics, and consequences. Broadly, antecedents refer to forces in the external and internal environments of the two firms; characteristics are related to various attributes of the acquirer's approach; and consequences deal with the impact of the acquirer's chosen strategy. Scholars such as Wiedman (2000) and Hirst, Koonce, and Venkataraman (2008) use a similar framework to organize the management earnings forecasts literature.
In the context of takeover strategies, antecedents, ...
