• 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 8.0 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 42.1 percent for deals with a go-shop and 41.7 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 7 0       22.1% 6.2% 41.3%
    2006 4 0       29.2% 8.0% 43.5%
    2007 6 2 17.6% 5.6% 26.4% 4.9% 7.9% 14.9%
    2008 4 1 21.1% 12.9% 36.7% 48.6% 4.9% 68.3%
    2009 1 0       7.3% 4.8% 18.1%
    2010 4 2 48.5% 12.1% 72.0% 68.4% 23.5% 157.3%
    2011 3 0       22.2% 4.4% 35.6%
    2012 4 1 6.8% 10.9% 30.1% 31.7% 23.5% 31.7%
    2013 2 1 25.5% 8.6% 43.4% 41.0% 11.4% 71.3%
    2014 2 1 15.5% 17.9% 42.1% 20.6% 2.4% 34.5%
    2015 5 0       22.1% 8.5% 49.5%
    2016 1 1 57.5% 5.2% 65.8%      
    TOTAL 43 9 22.3% 10.6% 42.1% 22.4% 8.0% 41.7%

     

    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 31.2 percent. Deals with a go-shop received a premium of 27.5 percent, while deals without one had a premium of 31.6 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 105 1 25.0% 3.7% 25.0%
    2006 146 11 26.0% 18.4% 26.4%
    2007 163 19 24.3% 21.9% 24.9%
    2008 56 6 34.0% 30.4% 36.7%
    2009 33 1 36.6% 48.5% 35.0%
    2010 103 17 34.6% 37.2% 33.2%
    2011 83 14 37.5% 33.2% 38.5%
    2012 79 13 33.2% 27.7% 34.5%
    2013 77 12 28.4% 20.5% 31.0%
    2014 66 5 32.0% 24.6% 33.1%
    2015 83 12 30.9% 27.5% 34.2%
    2016 85 12 38.7% 27.0% 42.6%
    TOTAL 1,079 123 31.2% 27.5% 31.6%

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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, 2016
      • Target is a US public company
      • The deal value is greater than $100 million
      • 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. Premium Calculation:
      • Initial bid premium is the premium of the initial offer over share price of the target company 21 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 21 days prior to the announcement date of the initial offer
    4. Thomson ONE, Bloomberg, SEC EDGAR
    Notes & Sources

Go-Shops in M&A Deals: A Win-Win Provision?