The Optimal Timing Game in Merger and Acquisition with Premium under Incomplete Information of Bidders

This paper examines the optimal threshold value of merger and acquisition with premium by method of real option and optimal stopping time. With the numerical example it is concluded that the ratio of merger and acquisition premium fluctuates reversely with the upper and lower bound of threshold value. Based on the conclusion, the author further analyzes the optimal strategy of merger and acquisition considering of rival's premium under incomplete information game theoretic and makes some more practical value conclusions.