Bidding War Research Articles

Politicians' decision making with re-election concerns

We study the impact of elected officials' re-election concerns on their decisions on whether to undertake new projects. The value of a project to a jurisdiction depends in part on its elected official's uncertain ability at providing some public goods. Our main result is that the elected official's willingness to pay for the project differs from voters' willingness to pay. If the incumbent official expects to lose (win) the election, then she is willing to pay more (less) than the project's total value to voters. We show how our analysis can be applied to bidding wars among jurisdictions for firms.

Investment firms to buy Sterling Chemicals

Sterling Chemicals—a Houston-based company that put itself on the block in January—has reached a definitive agreement to sell the company to two investment banking firms. The deal could spark a bidding war with Huntsman Corp., another potential purchaser. The two firms are Sterling Group, also based in Houston, and the Unicorn Group of Cranford, N.J. They are offering shareholders $12 per share in cash or in a combination of cash and securities, in a deal worth a total of at least $668 million. At press time, C&EN was unable to obtain an explanation from Sterling Chemicals, Sterling Group, or Unicorn as to why this offer is superior to a $12-per-share bid for Sterling Chemicals made April 15 by Salt Lake City-based Huntsman. Indeed, Jon M. Huntsman, chairman and chief executive officer of Huntsman, complains that Sterling Chemicals did not allow his company to perform a due diligence review of Sterling Chemicals' books that was set ...

Restructuring Scottish grocery retailing: the rise and demise of Shoprite and Wm Low

The changing consumer market in Scotland in the 1980s attracted considerable retailer attention. Arguably, the introduction by Shoprite, in November 1990, of the deep discount format destabilized the existing corporate retail structure and set in motion a series of challenges to the existing retail landscape that led to a major restructuring. This restructuring has involved the demise of Shoprite itself under massive pressure from established retailers and the takeover of Wm Low by Tesco after a bidding war with J Sainsbury. Details the story of Shoprite′s rise and demise and the linked takeover of Wm Low, and discusses their importance.

DUPONT $8.8 BILLION BUYBACK

In a transaction valued at about $8.8 billion in cash and notes, DuPont has repurchased nearly all of the 24% stake in the company held by Seagram. DuPont will sell off some assets to help finance the deal. Seagram parted with 156 million shares of common stock but retains 8.2 million shares, a 1.2% stake. Four Seagram executives who have been serving on DuPont's board have resigned and will not be replaced. The maker of distilled spirits, wines, and juices acquired its interest in DuPont 14 years ago—valued then at about $3 billion—after a bidding war for Conoco. Conoco eventually became DuPont's petroleum subsidiary, but DuPont had to exchange its shares for Seagram's interest in Conoco. Seagram wanted to withdraw and redeploy almost all of its DuPont assets, notes Edgar S. Woolard Jr., chairman and chief executive officer of DuPont. This allowed us to negotiate an arrangement whereby we were able to acquire the shares ...

The Winners in the Bidding War for Top Black College Students

The Winners in the Bidding War for Top Black College Students

The Strategic Role of Debt in Takeover Contests

ABSTRACTIn a takeover contest, the presence of bidders' existing debtholders, if they can be expropriated by issuing new debt with equal or senior priority, allows bidders to commit to bid more than their valuation of the target. Such commitment can be beneficial because it deters potential entry by subsequent bidders and may allow a first bidder to acquire the target at a bargain price. The cost is that if entry by subsequent bidders does nevertheless take place, because the first bidder has committed himself to bid high premia, a bidding war ensues resulting in offers that may involve excessive premia, i.e., bids that are larger than the bidders' valuation of the target.

The Bidding War for Top Black Students

The Bidding War for Top Black Students

Sensible State and Local Economic Development

Hardly a day goes by without the media reporting new economic development initiatives by states and localities in the United States. Competition is keen and the stakes are high because officials and the electorate view a successful economic development policy as being essential. One of the best recent examples, underscoring the intensity and importance of this issue, was the bidding war that the states of Indiana and Ohio waged in 1982 over the International Harvester Corporation. It is generally accepted that economic development initiatives are an important component of state and local public policy, and the electorate expects its elected officials to succeed in promoting economic development. Unfortunately, it is not always true that the policies adopted to promote development are efficient