Can Stock Liquidity be Transferred and Upgraded in Acquisitions? Option-Adjusted Evidence from Liquidity Synergies in US Freeze-Outs

This paper investigates the value successful bidders generate from acquiring less liquid targets. This synergy is traced with both theoretical and empirical evidence from the squeeze-out stage of going private transactions, when bidders hold sizeable toeholds in target shares. On one side, via liquidity transferring, acquirers can effectively transfer their thinner liquidity discount on the valuation of their toeholds in fully acquired target...