more quickly.38 In tender offer freeze-outs, 75% of minority shareholders, on average, tendered
in to the front-end tender offer, though this statistic masks variation ranging from 20% of
minority shares tendered (IIC Industries) to 99% (National Home Centers).
Finally, Table 2 reveals large differences in the premiums paid in tender offers and mergers.
Consistent with Hypothesis H1, Table 2 shows that negotiated prices, as measured by increases
over controllers’ first offers and premiums over pre-deal market prices, are higher, on average,
when the controller uses a merger compared to a tender offer. These differences are statistically
and economically significant at every stage of the negotiation process. Using the average trading
price of the target stock for 30 days prior to the deal announcement as a baseline date, Table 2A
shows that average first offers are 13% higher in merger freeze-outs than in tender offer freeze-
outs, and average increases from those first offers are 15% larger. Putting these findings
together, final deal prices in successful deals are 23% higher in merger freeze-outs than in tender
economically and statistically significant when Delaware targets only are examined.
4.3. Multivariate analysis of outcomes
I now run a multivariate analysis to control for other factors that are likely to influence deal
outcomes. The independent variables of interest are TENDER and MINREQ. TENDER is a
dummy variable set to 1 if the freeze-out is executed as a tender offer. Hypothesis H1 predicts
that the TENDER coefficient will be statistically significant and negative. For reasons described
38 See, e.g., WorldPort Communications SC-TO-T (filed Dec. 23, 2002) (“Q: Why is [the controlling shareholder] not seeking approval of its offer from WorldPort’s independent directors? A: We want to begin to realize the benefits of taking WorldPort private as soon as possible and believe that making a tender offer directly to WorldPort stockholders will be significantly faster than making a proposal for consideration by WorldPort's independent directors and negotiating a merger agreement with those directors. We believe that the WorldPort stockholders are capable of evaluating the fairness of the Offer. We also note that over 80% of the shares not owned by us would need to be tendered to satisfy the Minimum Condition. Accordingly, we are not seeking to negotiate our Offer with WorldPort.”).
The numbers are not exactly additive because failed deals drop out in the final offer calculation.