This paper analyzes and models tender offer and merger which are takeover methods in corporate control market. Tender offer is modeled on English auction in which target firm's shareholders are auctioneers and acquiring firms are bidders. Marger is modeled on Nash bargaining game in which target firm's manager and acquiring firm are bargainers. The above two takeover methods have different characteristics in bargaining position, competition, manager's resistance and information. Based on those characteristics, bidding firms choose one of takeover methods. And this paper considers manager's resistance in tender offer and preemptive bidding in addition to the basic model.
The bidding firm choose takeover method based on its synergy gain given the above conditions. The results of this paper are consistent with emperical studies which compare target firm and bidding firm's returns of tender offers with those of mergers.
