In a period of fractured approaches across Europe to takeovers despite implementation of a directive, the Commission's merger regulation mechanisms create interesting incentives and disincentives for management – both target and bidder.
When discussions start between a target and bidder, one of the first to-do items is often to draft the "leak announcement" — the news release acknowledging that talks are taking place once a leak occurs.
Thus, a merger is most likely to be approved by the shareholders of both sides if the exchange ratio is larger than the ratio of the target-to-bidder prices, but smaller than the ratio of target-to-bidder EPS.
The acquisition had to have a relative size of at least one percent (Masulis et al. 2007), measured as an index of target sales to bidder sales and/or deal value to bidder market capitalization 20 days before the announcement date of the acquisition.
To the contrary, as far as those matters were concerned, and apart from matters of disclosure, Congress sought to be neutral and evenhanded it chose to leave the balance between targets and bidders, as established by state law, alone.
Balance between the target and the bidder is paramount in the eyes of the regulators.
With Procter gone as a potential suitor, American Home becomes the target of other bidders, too, analysts said.
But whether this is being driven by target companies or bidders – and whether the trend signals a fuller shopping of the company – can be difficult to determine, even when the negotiations are disclosed.
"[The HPE deal] would be the biggest acquisition by a British company of a foreign tech firm, and comes in the face of a massive drop in the value of the pound that has made UK firms the target of overseas bidders".
With sources close to the two companies telling TechCrunch that this is the first time Match has ever mentioned possible patent infringements by Bumble, it's very possible that Match feels that discussions have stalled and this is their way of either forcing the deal forward or making Bumble an unattractive target for other bidders that may be scared off by this potential legal liability.
