Turning to the lower half of the Figure 2 roadmap, the general picture of the merger process
seems to be vigorous bargaining between the SC and the controller, indicated both by the high
rate of SC formation (80 out of 85 deals, or 94%) and the high rate of impasse between the
controller and the SC (18 out of 80 deals, or 23%). In contrast, conditional on SC approval,
minority shareholder approval seems to be only a minimal constraint: only 33% of one-step
merger deals (18 out of 55) were subject to a MOM condition, and among these 18 deals all but
one (Johnson Outdoors) received the requisite level of minority shareholder support.
A final point from Figure 2 is the consummation rate: 30 out of 36, or 83%, for deals initiated
as tender offers, compared to 67 out of 85, or 79%, for deals initiated as merger freeze-outs. A t-
test indicates that this difference in success rates is not statistically significant at 95%
confidence. By way of comparison, Coates & Subramanian (2000) report that the completion
rate for arms-length, friendly M&A transactions during the period 1988-1999 was 87%.
Table 1 provides the state of incorporation for the targets in the sample, broken down by
choice of transactional form.
[insert Table 1 here]
Table 1 shows that 59% of freeze-out targets are incorporated in Delaware, higher than
Delaware’s overall market share of approximately 50% among U.S. publicly-traded companies
(Subramanian 2002, Bebchuk & Cohen 2003). Delaware’s larger market share among freeze-
outs may be due to its more well-developed case law, which might promote freeze-outs, or
because companies that contemplate moving between public and private status are more likely to
transactional form: 71% (25 out of 35) for tender offer freeze-outs, compared to 54% (45 out of
84) for merger freeze-outs.