• Deal Metrics:

    Go-Shops and Topping Bids

    A QUICK LOOK AT TOPPING BIDS | GO-SHOPS AND TOPPING BIDS

    Table 1: Go-Shop Provisions and Third-Party Topping Bids (All deals referenced are friendly completed cash deals)

    Here, we look at deals that were topped by a third party.

    Go-shops can sometimes result in higher offers. For example, when go-shops resulted in a bidding contest, the target was able to solicit a bid that exceeded the original offer by 10.6 percent. This is a bit higher than 6.2 percent, the amount by which bids without a go-shop were topped.

    The table also shows that when the dust settles, the final premium realized by targets that received a topping bid was 44.9 percent for deals with a go-shop and 43.7 percent for deals without the provision.

      Median Bid Premium of Deals Where Go-Shop Caused Topping Bid from Third Party Median Bid Premium of Deals without Go-Shop but Still Topped by Third Party
    Announcement Year Number of Deals with a Third-Party Topping Bid Number of Deals Where Go-Shop Caused Topping Bid from Third Party  Initial First Topping Final Initial First Topping Final
    2005 6 0 N/A N/A N/A 27.2% 6.0% 53.3%
    2006 6 0 N/A N/A N/A 31.7% 8.0% 51.1%
    2007 10 4 13.6% 5.6% 18.7% 10.8% 5.7% 36.3%
    2008 4 1 31.1% 12.9% 48.1% 46.6% 4.9% 58.8%
    2009 2 1 64.6% 13.1% 86.2% 22.5% 4.8% 34.8%
    2010 4 2 42.4% 12.1% 65.0% 49.1% 23.5% 128.0%
    2011 2 0 N/A N/A N/A 43.6% 2.4% 46.8%
    2012 4 1 23.2% 10.9% 50.0% 19.8% 15.0% 34.8%
    TOTAL 38 9 23.2% 10.6% 44.9% 29.5% 6.2% 43.7%


    Table 2: Go-Shop Provision and Non-Topping Bids (All deals referenced are friendly completed cash deals)

    Here, we look at deals that were not topped by a third party.

    On average, the premium received by targets was 32.7 percent. Deals with a go-shop received a premium of 29.5 percent, while deals without one had a premium of 33.0 percent.

    On the whole, as the tables suggest, and as has been noted before, go-shops can be useful – but they are not free.

      Median Premium
    Announcement Year Number of Deals without a
    Topping Bid
    Number of Deals without
    a Topping Bid and with Go-Shop
    Deals without a Topping Bid Deals without a Topping Bid and with Go-Shop Deals without a Topping Bid and without Go-Shop
    2005 98 1 27.0% 5.0% 27.1%
    2006 137 8 25.9% 24.5% 25.9%
    2007 150 19 29.7% 29.5% 30.0%
    2008 53 6 38.4% 28.4% 38.6%
    2009 34 2 52.6% 124.6% 52.2%
    2010 98 17 43.3% 43.7% 42.9%
    2011 83 13 38.7% 28.2% 40.4%
    2012 74 13 33.6% 26.2% 37.8%
    TOTAL 727 79 32.7% 29.5% 33.0%

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  • Notes & Sources:

    1. Transactions are selected based on the following criteria:

    • Announcement date is between January 1, 2005, and December 31, 2012
    • Target is a U.S. public company
    • The deal value is greater than $100 million
    • The initial price per share is greater than $5    

    2. If two transactions share the same target company and the time span between the announcement dates of the two transactions is less than one year,
    the two transactions are combined as one transaction with two different bids.

    3. 27 topping transactions are excluded due to missing data. 186 non-topping transactions are excluded due to missing data.

    4. Premium Calculation:

    • Initial bid premium is the premium of the initial offer over share price of the target company 42 days prior to the announcement date of the initial offer;
    • First topping bid premium is the premium of the initial topping offer over the initial offer;
    • Final bid premium is the premium of the completed offer over share price of the target company 42 days prior to the announcement date of the initial offer.

    5. Third-party topping deals have more than one bidder. Self-topping deals have only one bidder.

    6. Thomson ONE, Bloomberg, SEC EDGAR, Capital IQ.

    Notes & Sources

  • This feature appeared in the July 2013 Corporate Transaction Litigation Alert.