Abstract
We study takeovers of firms whose ownership structure is a mixture of minority block-holders and small shareholders. We show that the combination of dispersed private information on the side of small shareholders and the presence of a large shareholder can facilitate profitable takeovers. Furthermore, our analysis implies that even if some model of takeovers predicts a profit for the raider, for example, due to private benefits, the profit will be underestimated unless the large shareholder and the dispersion of information among the small shareholders are modeled.
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