The choice between various freeze-out procedures and its consequences

We develop a model of freeze-out merger and tender offers and test it in an economy where merger and tender regulation are extremely different. Using a relatively large sample of 329 freeze-out offers in Israel during 2000–2019, we document evidence consistent with the model. We also find that tender offers: (1) are the preferred technique; (2) offer lower premiums; and (3) suffer from a relatively large (40%) offer rejection rate. These findings diverge from U.S. evidence, and are partly due to differences in the tender offer procedures. Thus, our study illustrates that the tender offer procedure is a delicate one, and explains why Delaware has often amended it.

Duke Scholars

Author Evgeny Lyandres Fuqua School of Business