Among the remaining states, California is a distant second in market share, with five merger
freeze-outs and two tender offer freeze-outs. Florida is in third place with four merger freeze-
outs and no tender offer freeze-outs. The remaining 39 freeze-outs are distributed across 24 U.S.
states and a federal charter, with no state holding more than a 3% share.
Table 2A provides summary statistics, for all freeze-outs and broken down by transactional
form. Table 2B provides the same summary statistics for Delaware targets only.
[insert Tables 2A & 2B here]
Examining shareholder characteristics, controllers who use the tender offer mechanism hold
larger pre-deal stakes than controllers who use the merger mechanism, providing some support
for Hypothesis H3. I test this hypothesis more carefully in the multivariate regressions reported
conversely, controllers that are also corporations are more likely to use the tender offer
mechanism. Specifically, Table 2A shows that founders or family groups account for nearly half
of merger freeze-outs but only one-third of tender offer freeze-outs.
“Highly experienced” outside counsel are over-represented in the tender offer mechanism,
accounting for 49% of tender offers and only 22% of mergers. The difference becomes more
pronounced when Delaware targets only are examined: 63% of tender offers involve experienced
outside counsel, compared to 21% of mergers. These findings are consistent with Hypothesis
H4. I test this hypothesis more carefully in Part 4.5.
On deal characteristics, 21% of freeze-outs overall, and 26% of tender offer freeze-outs,
involve stock rather than cash. This finding is inconsistent with Gilson & Gordon’s claim that