Merger negotiations with stock market feedback

Merger negotiations routinely occur amidst economically significant a target stock price runups. Since the source of the runup is unobservable (is it a target stand-alone value change and/or deal anticipation?), feeding the runup back into the offer price risks "paying twice" for the target shares. We present a novel structural empirical analysis of this runup feedback hypothesis. We show that rational deal anticipation implies a nonlinear relationship between the runup and the offer price markup (offer price minus runup). Our large-sample tests confirm the existence of this nonlinearity and reject the feedback hypothesis for the portion of the runup not driven by the market return over the runup period. Also, rational bidding implies that bidder takeover gains are increasing in target runups, which our evidence supports. Bidder toehold acquisitions in the runup period are shown to fuel target runups, but lower rather than raise offer premiums. We conclude that the parties to merger negotiations interpret market-adjusted target runups as reflecting deal anticipation.Merger negotiations; stock market feedback

Merger Negotiations and the Toehold Puzzle

The substantial control premium typically observed in corporate takeovers makes a compelling case for acquiring target shares (a toehold) in the market prior to launching a bid. Moreover, auction theory suggests that toehold bidding may yield a competitive advantage over rival bidders. Nevertheless, with a sample exceeding 10,000 initial control bids for US public targets, we show that toehold bidding has declined steadily since the early 1980s and is now surprisingly rare. At the same time, the average toehold is large when it occurs (20%), and toeholds are the norm in hostile bids. To explain these puzzling observations, we develop and test a two-stage takeover model where attempted merger negotiations are followed by open auction. With optimal bidding, a toehold imposes a cost on target management, causing some targets to (rationally) reject merger negotiations. Optimal toeholds are therefore either zero (to avoid rejection costs) or greater than a threshold (so that toehold benefits offset rejection costs). The toehold threshold estimate averages 9% across initial bidders, reflecting in part the bidder\u27s opportunity loss of a merger termination agreement. In the presence of market liquidity costs, a threshold of this size may well induce a broad range of bidders to select zero toehold. As predicted, the probability of toehold bidding decreases, and the toehold size increases, with the threshold estimate. The model also predicts a relatively high frequency of toehold bidding in hostile bids, as observed. Overall, our test results are consistent with rational bidder behavior with respect to the toehold decision

Merger Negotiations with Stock Market Feedback

Do preoffer target stock price runups increase bidder takeover costs? We present model-based tests of this issue assuming runups are caused by signals that inform investors about potential takeover synergies. Rational deal anticipation implies a relation between target runups and markups (offer value minus runup) that is greater than minus one-for-one and inherently nonlinear. If merger negotiations force bidders to raise the offer with the runup—a costly feedback loop where bidders pay twice for anticipated target synergies—markups become strictly increasing in runups. Large-sample tests support rational deal anticipation in runups while rejecting the costly feedback loop

The dynamics of the impact and coalescence of droplets on a solid surface.

A simple experimental setup to study the impact and coalescence of deposited droplets is described. Droplet impact and coalescence have been investigated by high-speed particle image velocimetry. Velocity fields near the liquid-substrate interface have been observed for the impact and coalescence of 2.4 mm diameter droplets of glycerol∕water striking a flat transparent substrate in air. The experimental arrangement images the internal flow in the droplets from below the substrate with a high-speed camera and continuous laser illumination. Experimental results are in the form of digital images that are processed by particle image velocimetry and image processing algorithms to obtain velocity fields, droplet geometries, and contact line positions. Experimental results are compared with numerical simulations by the lattice Boltzmann method

PICALM modulates autophagy activity and tau accumulation.

Genome-wide association studies have identified several loci associated with Alzheimer's disease (AD), including proteins involved in endocytic trafficking such as PICALM/CALM (phosphatidylinositol binding clathrin assembly protein). It is unclear how these loci may contribute to AD pathology. Here we show that CALM modulates autophagy and alters clearance of tau, a protein which is a known autophagy substrate and which is causatively linked to AD, both in vitro and in vivo. Furthermore, altered CALM expression exacerbates tau-mediated toxicity in zebrafish transgenic models. CALM influences autophagy by regulating the endocytosis of SNAREs, such as VAMP2, VAMP3 and VAMP8, which have diverse effects on different stages of the autophagy pathway, from autophagosome formation to autophagosome degradation. This study suggests that the AD genetic risk factor CALM modulates autophagy, and this may affect disease in a number of ways including modulation of tau turnover.We are grateful for funding from a Wellcome Trust Principal Research Fellowship (D.C.R.), a Wellcome Trust/MRC Strategic Grant on Neurodegeneration (D.C.R., C.J.O’.K.), a Wellcome Trust Strategic Award to Cambridge Institute for Medical Research, Wellcome Trust Studentship (E.Z.), the Alzheimer’s disease Biomedical Research Unit and Addenbrooke’s Hospital, the Tau Consortium, a fellowship from University of Granada (A.L.R.), a V Foundation/Applebee’s Research Grant (D.S.W.) and NCI R01 CA 109281 (D.S.W.).This is the final published version. It is also available from Nature Publishing at http://www.nature.com/ncomms/2014/140922/ncomms5998/full/ncomms5998.html

The estimation of black-hole masses in distant radio galaxies

We have estimated the masses of the central supermassive black holes of 2442 radio galaxies froma catalog compiled using data from the NED, SDSS, and CATS databases. Mass estimates based on optical photometry and radio data are compared. Relationships between the mass of the central black hole $M_p^{bh}$ and the redshift $z_p$ are constructed for both wavelength ranges. The distribution of the galaxies in these diagrams and systematic effects influencing estimation of the black-hole parameters are discussed. Upperenvelope cubic regression fits are obtained using the maximum estimates of the black-hole masses. The optical and radio upper envelopes show similar behavior, and have very similar peaks in position, $z_p \simeq 1.9$, and amplitude, $\log M_p^{bh}$ = 9.4. This is consistent with a model in which the growth of the supermassive black holes is self-regulating, with this redshift corresponding to the epoch when the accretion-flow phase begins to end and the nuclear activity falls off.Comment: 8 pages, 6 figure

Geochemistry and petrogenesis of the Etendeka volcanic rocks from SWA Namibia

The volcanic rocks of the Etendeka Formation from north-west SWA/Namibia have a present-day coverage of 70,000 km² and comprise a series of interbedded basalts, latites and quartz latites, together with four varieties of intrusive dolerite. Apart from one group of dolerites (regional dolerites) which have mineralogical and geochemical similarities to the Lesotho Formation lavas from the Central area, the Etendeka volcanics differ from all other Karoo volcanics by virtue of their Cretaceous age, stratigraphy, mineralogy, geochemistry, and range in mineralogical, elemental and isotopic compositions for the basaltic rocks

Identification of a novel BET bromodomain inhibitor-sensitive, gene regulatory circuit that controls Rituximab response and tumour growth in aggressive lymphoid cancers.: CYCLON-induced Rituximab resistance

International audienceImmuno-chemotherapy elicit high response rates in B-cell non-Hodgkin lymphoma but heterogeneity in response duration is observed, with some patients achieving cure and others showing refractory disease or relapse. Using a transcriptome-powered targeted proteomics screen, we discovered a gene regulatory circuit involving the nuclear factor CYCLON which characterizes aggressive disease and resistance to the anti-CD20 monoclonal antibody, Rituximab, in high-risk B-cell lymphoma. CYCLON knockdown was found to inhibit the aggressivity of MYC-overexpressing tumours in mice and to modulate gene expression programs of biological relevance to lymphoma. Furthermore, CYCLON knockdown increased the sensitivity of human lymphoma B cells to Rituximab in vitro and in vivo. Strikingly, this effect could be mimicked by in vitro treatment of lymphoma B cells with a small molecule inhibitor for BET bromodomain proteins (JQ1). In summary, this work has identified CYCLON as a new MYC cooperating factor that autonomously drives aggressive tumour growth and Rituximab resistance in lymphoma. This resistance mechanism is amenable to next-generation epigenetic therapy by BET bromodomain inhibition, thereby providing a new combination therapy rationale for high-risk lymphoma

Halloween, Organization, and the Ethics of Uncanny Celebration

This article examines the relationship between organizational ethics, the uncanny, and the annual celebration of Halloween. We begin by exploring the traditional and contemporary organizational function of Halloween as ‘tension-management ritual’ (Etzioni, Sociol Theory 18(1):44–59, 2000) through which collective fears, anxieties, and fantasies are played out and given material expression. Combining the uncanny with the folkloric concept of ostension, we then examine an incident in which UK supermarket retailers made national news headlines for selling offensive Halloween costumes depicting ‘escaped mental patients’. Rather than treating this incident as a problem of moral hygiene—in which products are removed, apologies made, and lessons learned—we consider the value of Halloween as a unique and disruptive ethical encounter with the uncanny Other. Looking beyond its commercial appeal and controversy, we reflect on the creative, generous, and disruptive potential of Halloween as both tension-management ritual and unique organizational space of hospitality through which to receive and embrace alterity and so discover the homely within the unheimlich

Determinants of Cross-Border M&As and Shareholder Wealth Effects in a Globalized World

We analyze theoretical insights and empirical regularities related to factors determining the cross-border mergers and acquisitions (M&As) and impact of M&As on shareholder value of acquires and targets. The analysis of cross-border M&As is a relatively new subject and only recently received rigorous attention in academic research. Within this nascent literature, the survey pays particular attention to the emerging markets, which, in line with their growing role of in the global economy, became an increasingly important arena for cross-border M&As. The existing evidence point out to prevailing challenges in studying cross-border M&As by emerging markets firms. The results are often contradictory and tend to focus on a single country falling short of formally testing existing theories or developing comprehensive theories for emerging economies. We show that the type of factors increasing the value enhancing effects of M&As tends to be similar to the factors affecting the likelihood of M&As transactions. The remaining methodological challenges for the existing studies are related to strong evidence with respect to nonrandom selection of acquisition targets, which, among other “selection issues,” has important implications for choosing counterfactual evidence in order to appropriately compare pre- and postacquisition performance of firms