Corporate Argumentation in Takeover Bids Argumentation in Context (AIC) This book series highlights the variety of argumentative practices that have become established in modern society by focusing on the study of context-dependent characteristics of argumentative discourse that vary according to the demands of the more or less institutionalized communicative activity type in which the discourse takes place. Examples of such activity types are parliamentary debates and political interviews, medical consultations and health brochures, legal annotations and judicial sentences, editorials and advertorials in newspapers, and scholarly reviews and essays. For an overview of all books published in this series, please see http://benjamins.com/catalog/aic Editors Frans van Eemeren Bart Garssen ILIAS & Leiden University ILIAS & University of Amsterdam & University of Amsterdam Editorial Board Mark Aakhus Eddo Rigotti Rutgers University University of Lugano Marianne Doury Sara Rubinelli CNRS Paris ILIAS, Swiss Paraplegic Research & University of Lucerne Eveline Feteris University of Amsterdam Takeshi Suzuki Meiji University G. Thomas Goodnight University of Southern California Giovanni Tuzet Bocconi University Cornelia Ilie Zayed University, Abu Dhabi David Zarefsky Northwestern University Sally Jackson University of Illinois at Urbana-Champaign Gábor Zemplén Budapest University of Technology Manfred Kienpointner and Economic University of Innsbrueck Volume 8 Corporate Argumentation in Takeover Bids by Rudi Palmieri Corporate Argumentation in Takeover Bids Rudi Palmieri USI-University of Lugano John Benjamins Publishing Company Amsterdam / Philadelphia TM The paper used in this publication meets the minimum requirements of 8 the American National Standard for Information Sciences – Permanence of Paper for Printed Library Materials, ansi z39.48-1984. Library of Congress Cataloging-in-Publication Data Palmieri, Rudi. Corporate Argumentation in Takeover Bids / Rudi Palmieri. p. cm. (Argumentation in Context, issn 1877-6884 ; v. 8) Includes bibliographical references and index. 1. Tender offers (Securities) 2. Consolidation and merger of corporations. 3. Persuasion (Rhetoric) 4. Discourse analysis. I. Title. HG4028.T4P35 2014 338.8’3014--dc23 2014024706 isbn 978 90 272 1125 5 (Hb ; alk. paper) isbn 978 90 272 6946 1 (Eb) © 2014 – John Benjamins B.V. No part of this book may be reproduced in any form, by print, photoprint, microfilm, or any other means, without written permission from the publisher. John Benjamins Publishing Co. · P.O. Box 36224 · 1020 me Amsterdam · The Netherlands John Benjamins North America · P.O. Box 27519 · Philadelphia pa 19118-0519 · usa To my family and to the memory of Giorgio Salvadè Table of contents Acknowledgements ix chapter 1 Introduction 1 1.1 The argumentative dimension of corporate takeovers 1 1.2 Objective of the study and research questions 3 1.3 The UK takeover market 8 1.4 Structure of the book 9 chapter 2 The argumentative intervention in context: Theoretical concepts and analytical instruments 13 2.1 Argumentation as a context-situated communicative activity 13 2.1.1 The argumentative situation 13 2.1.2 Inference, dialectic and rhetoric 17 2.1.3 Comparison with the main approaches to corporate financial communication 21 2.2 Building an analytical toolkit for the reconstruction of contextualized argumentative interactions 25 2.2.1 The four stages of an ideal critical discussion and its empirical counterparts 25 2.2.2 The Argumentum Model of Topics 30 2.2.3 Linking the analytic overview to the inferential configuration 36 chapter 3 Eliciting argumentative situations in takeover bids 43 3.1 The takeover transaction and its main phases 44 3.2 Argumentative exigencies of the bidder and the target directors 50 3.2.1 The desirability of a takeover from the bidder’s perspective 50 3.2.2 The position of the target directors 59 3.2.3 Argumentation in pre-offer negotiations: A case in point 61 3.2.1 Possible outcomes of the pre-offer phase 63 3.3 The audience of the directors’ argumentative discourse 64 3.3.1 A complex interaction field 65 3.3.2 Shareholders: The decision-makers 67 iii Corporate argumentation in takeover bids 3.3.3 Financial analysts and journalists as secondary audiences 71 3.3.4 The communicative role of non-financial stakeholders 73 3.4 Argumentatively relevant constraints in takeover regulation 74 3.4.1 Raison d’être of takeover regulation in the UK context 75 3.4.2 Announcements and documents from the bidder 78 3.4.3 The target Board’s reasoned opinion 80 3.4.4 The setting up and disciplining of two argumentative interaction schemes 81 3.5 A more comprehensive model of the takeover process 85 chapter 4 The offer procedure as an argumentative activity a type 89 4.1 Case selection and procedure for the argumentative analysis 90 4.2 Speech events of the offer period 93 4.3 Macro-analysis of the main text typologies 96 4.3.1 The firm intention announcement and the offer document 97 4.3.2 The defense document 100 4.4 Argumentative characteristics in the communicative interactions of the offer period 103 4.4.1 The initial situation 103 4.4.2 Starting points 107 4.4.3 Argumentative means 112 4.4.4 Possible outcomes 115 4.5 Friendly and hostile offers as kindred argumentative activity types 117 chapter 5 The argumentative coordination in friendly offers 123 5.1 The target Board’s justification of the recommendation 123 5.1.1 Justifying the recommendation by explaining a decision 126 5.1.2 Preparing for the argumentation stage in the offer’s description 130 5.1.3 Backgrounding the recommendation to dispel adverse implications 134 5.1.4 Combining financial and social-organizational values 139 5.1.5 Levering on the means of payment for topical choices 145 5.2 The bidder’s justification of the envisaged acquisition 152 5.2.1 Renouncing to declare the main standpoint 152 5.2.2 Showing coherence with the announced corporate strategy 154 5.2.3 Presenting the combination as a happy joint action 158 5.3 Directors’ co-protagonism as the friendly offer’s strategic maneuvering 161 Table of contents ix chapter 6 The argumentative opposition in hostile bids 169 6.1 The hostile bidder’s argumentative approach 169 6.1.1 Assuming an advisory role 169 6.1.2 The offer price as one component of a win-win deal 175 6.1.3 An opportunity to realize the investment 182 6.2 The target defense strategy 184 6.2.1 Framing the bid as a malevolent act 184 6.2.2 Focusing the topical choice on financial aspects 185 6.2.3 Price inadequacy and good standalone prospects: A strategic ambiguity? 191 chapter 7 Refuting the endoxical basis of the opposite argumentation 197 7.1 Strategic maneuvers in the discussions over the adequacy of the offer price 197 7.1.1 Criticizing the assumptions behind relative valuation 200 7.1.2 Questioning expert opinions 207 7.2 Arguing for a particular interpretation of managers’ past actions 212 chapter 8 Conclusion 219 8.1 Review and assessment of the main findings 220 8.1.1 The takeover bid as an argumentative context 220 8.1.2 The bidder and the target board’s argumentative strategies 225 8.2 On financial communication 234 8.3 Open questions for future research 237 References 241 Index of figures 257 Annex 1: List of cases and relevant information 261 Name index 267 Subject index 271