PAM_334_Fall_2008_Lecture_13 - PAM3340 Lecture13 Agenda:...

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PAM 3340 Lecture 13 Agenda: Takeover law Jensen, “Takeovers: Causes and  Consequences” Agency costs of free cash flow Event study method
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Federal Law: Williams Act Federal law affecting takeovers: Williams Act of 1968  An Amendment to the Securities and  Exchange Act of 1934: Any person acquiring more than 5% of a  publicly traded firm must file a report with  SEC (Schedule 13D)
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Federal Law: Williams Act  (con’t) 13D filing: Must state  intent  (investment  or control) If bidding for  control , must file more  detailed reports Tender offers must remain open for  about a month Targets have time to maneuver (can  block the bid or seek competing offers)
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Jensen, “Takeovers: Their  Causes and Consequences” Examines the 1977-86 period Unusually high takeover activity Note that target firm shareholders  expect to gain from takeover Gains to target shareholders over 10- year period $346 billion in 1986 dollars
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Jensen, continued Equal to about 51% of all dividends paid 
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This document was uploaded on 10/26/2011 for the course PAM 3340 at Cornell University (Engineering School).

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PAM_334_Fall_2008_Lecture_13 - PAM3340 Lecture13 Agenda:...

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