Leveraged Public to Private Transactions in the UK

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

Research output: Working paperDiscussion paperOther research output

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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

Fingerprint

Shareholders
Premium
Realignment
Shareholder wealth
Share prices
Announcement
Tax incentives
Price reaction
Tax shield
Free cash flow
Undervaluation

Keywords

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

Cite this

Renneboog, L. D. R., Simons, T., & Wright, M. (2005). Leveraged Public to Private Transactions in the UK. (CentER Discussion Paper; Vol. 2005-60). Tilburg: Finance.
Renneboog, L.D.R. ; Simons, T. ; Wright, M. / Leveraged Public to Private Transactions in the UK. Tilburg : Finance, 2005. (CentER Discussion Paper).
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Renneboog, LDR, Simons, T & Wright, M 2005 'Leveraged Public to Private Transactions in the UK' CentER Discussion Paper, vol. 2005-60, Finance, Tilburg.

Leveraged Public to Private Transactions in the UK. / Renneboog, L.D.R.; Simons, T.; Wright, M.

Tilburg : Finance, 2005. (CentER Discussion Paper; Vol. 2005-60).

Research output: Working paperDiscussion paperOther research output

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T1 - Leveraged Public to Private Transactions in the UK

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AU - Simons, T.

AU - Wright, M.

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N2 - 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.

AB - 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.

KW - Public to private

KW - going-private

KW - LBO

KW - MBO

KW - IBO

KW - Management buyins

KW - Management buyouts

KW - Leveraged buyouts

M3 - Discussion paper

VL - 2005-60

T3 - CentER Discussion Paper

BT - Leveraged Public to Private Transactions in the UK

PB - Finance

CY - Tilburg

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Renneboog LDR, Simons T, Wright M. Leveraged Public to Private Transactions in the UK. Tilburg: Finance. 2005. (CentER Discussion Paper).