Leveraged Public to Private Transactions in the UK

L.D.R. Renneboog, T. Simons, M. Wright

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Abstract

This paper examines the magnitude and the sources of the expected shareholder gains in UK public to private transactions (PTPs) in the second wave from 1997-2003.Pre-transaction shareholders on average receive a premium of 40% and the share price reaction to the PTP announcement is about 30%.The main sources of the shareholder wealth gains are undervaluation of the pre-transaction target firm, increased interest tax shields and incentive realignment.An expected reduction of free cash flows does not determine the premiums nor are PTPs a defensive reaction against a takeover.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages45
Volume2005-60
Publication statusPublished - 2005

Publication series

NameCentER Discussion Paper
Volume2005-60

Keywords

  • Public to private
  • going-private
  • LBO
  • MBO
  • IBO
  • Management buyins
  • Management buyouts
  • Leveraged buyouts

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    Renneboog, L. D. R., Simons, T., & Wright, M. (2005). Leveraged Public to Private Transactions in the UK. (CentER Discussion Paper; Vol. 2005-60). Finance.