Control Premium in tender
offers.
Evidence from Italy
and France.
Milano, 22 gennaio 2011
Prof. Antonio Salvi
Direttore Osservatorio M&A
Agenda
1. Control premium: a definition for listed firms
2. Private benefits of control: a taxonomy
3. Control premium: some evidence on Italy
4. The methodology
5. The sample
6. Italy: control premia
7. France: control premia
8. Control premia: Italy and France
9. Control premia: «Continental Europe?»
Control premium:
a definition for listed firms
Private benefits of control
ACQUISITION PRICE
ACQUISITION
PREMIUM
Synergies
Internal improvements
MARKET
CAPITALIZATION
CONTROL
PREMIUM
Private benefits of control:
a taxonomy
Control premia:
Some evidence on Italy
Authors
Year
Journal
Type of transaction
Sample
Period
Premium
BLOCK CONTROL PREMIUM
Caprio, Floreani e
Radaelli
1994
Finanza Imprese e Mercati
Transactions > 50% shares
33
1982-1992
22%
Nicodano and
Sembenelli
2004
International Review of
Financial Analysis
Transactions <10% shares
46
1987-1992
27%
Dyck and Zingales
2004
Journal of Finance
Control blocks > 10% shares
8
1990-2000
37%
Massari, Monge e
Zanetti
2006
Journal of Management and
Governance
Control blocks
27
1993-2003
8%
Saving shares vs. ordinary shares
391
1987-1990
82%
Saving shares vs. ordinary shares
60
1987-1988
20%
Saving shares vs. ordinary shares
80
1989-2000
24%
Saving shares vs. ordinary shares
32
1997-2000
57%
Saving shares vs. ordinary shares
116
1974-2003
44%
VOTING PREMIUM
Zingales
1994
Nicodano
1998
Linciano
2002
Venanzi
2003
Caprio and Croci
2008
Review of Financial Studies
Journal of Banking and
Finance
Quaderni di Finanza
CONSOB
Finanza Marketing e
Produzione
Journal of Banking and
Finance
The methodology
BLOCK CONTROL
Methodology
PREMIUM
Type of
Tender offers
transactions (voluntary and mandatory)
From 30 days before the
announcement to 10 days
Event window
after the closing of the
offer
Italy: 2000-2013
Time period
France: 2008-2013
The sample
2000-2013
2008-2013
ITALY
FRANCE
65
(Voluntary 34;
Mandatory 31)
23
39
(Voluntary: 12; (Voluntary: 15;
Mandatory: 11) Mandatory: 24)
Italy: Control premia
14,00%
12,00%
10,00%
Titolo asse
8,00%
Italy
6,00%
4,00%
2,00%
0,00%
-2,00%
Mandatory
Voluntary
France: Control premia
45,00%
40,00%
35,00%
30,00%
25,00%
20,00%
Voluntary
Mandatory
15,00%
10,00%
5,00%
0,00%
Total
Control premia: Italy and France
30,00%
25,00%
20,00%
15,00%
France
10,00%
5,00%
0,00%
Italy
Control premia:
«Continental Europe»?
16,00%
14,00%
12,00%
10,00%
8,00%
6,00%
4,00%
2,00%
0,00%
Some conclusions
1
It is important to differentiate between acquisition and
control premia.
2
Control premia in Europe are around 2%, way lower than
the percentages suggested in the literature.
3
Control premia are mainly affected by:
• the type of the offer
• the type of the bidder (industrial of financial)
• the size of the target
4
Possible reasons behind the premia decrease:
• Financial crisis and stock prices
• Tender offer regulation (“equal opportunity rule”)
• Minority protection regulation
• Decrease of “Group pyramiding”
• “Direzione e coordinamento” regulation and “Related
party committee” introduction