Takeover bid and game theory: an empirical investigation on the French market

The bid premium acquiring companies offer for target company shares has been modelled as a game by several theoritical studies, but the empirical implications of these models have not been as well explored. Our purpose is to test them on the French market for 1991-1995. The mean takeover premium of our sample is 31.3%. Our empirical results suggest that principal determinants of bid premium are the expected synergies, the percentage of the target shares controlled by the bidder prior to the offer, and the dilution of minority shares. We show a non linear relation between the bid premium and the part of voting rights previously controlled. In opposition to previous studies, the mean of payment has a non significant impact on the bid price.