Takeover Likelihood Models for UK Quoted Companies

Robin Nuttall

University of Oxford

January 3, 1999

Nuffield College, University of Oxford, Working Paper No. 6

Abstract:

This paper estimates takeover likelihood models for UK quoted companies. For a sample of 643 UK nonfinancial quoted companies over the period 1989-96, we find that the probability of being a takeover target is increasing in leverage and incidence of takeover speculation and decreasing in pre-bid performance, size and age since listing. Friendly and hostile targets differ in terms of age, size and capital structure, but not pre-bid performance. Lapsed and successful takeover targets differ in terms of size and age. Overall, the evidence here is consistent with a disciplinary view of hostile takeovers, while for friendly takeovers it is consistent with financial distress, financial synergy, going-public-to-sell-out and managerialist motivations.

Takeover Likelihood Models for UK Quoted Companies

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