• We would like to thank an anonymous referee, the JFR editors, Sanjay Banerji, Vicente Cunat, Alexander Gorbenko, C. Fritz Foley, Simon Gervais, Brandon Julio, Marcin Kacperczyk, Samuli Knupfer, Weimin Liu, Jose Martinez, David Newton, Filippos Papakonstantinou, Raghavendra Rau, Stefano Rossi, Joel Shapiro, Katrin Tinn, and Mungo Wilson for their valuable suggestions.


In a three-way takeover, a firm bids for a bidder while the bidder's own acquisition deal is ongoing. The bid creates a three-party fight among the target, bidder, and bidder's bidder (b-bidder) which is unobservable in typical takeover contests. Examining a sample of three-way takeovers, we find that more than half of the deals are clustered in financial, utilities, and communication, where fierce competition for market power drives the three-way bids. Targets and bidders gain from the three-party bargaining at the expense of b-bidders who appear to be more concerned about winning the bids irrespective of the costs.