The researchers have primarily developed and used the market efficiency hypothesis for surfacing the point that the fundamental price efficiency or the investors’ perception about it is integral to the strategy of the corporate takeovers. Hence, the perception of the share prices enables the decision making between the offers of cash tender and open market bids for the acquisitions. The open market bids are selected by the investors wherein the share prices are not informed and the true intrinsic value of the stock is not represented (Armour and Cheffins, 2016). However, when the confidence about the share prices is present and identification of the intrinsic worth of organization is made, the offers of cash tenders are the prevailing method of acquisition. Hence, the bids of take over and exchange tender proposals are made if the reliable assumptions are achieved.
The researchers have developed the claim on the basis of the efficient market hypothesis of Fama that the share price does not essentially have to be the barometer of the intrinsic organizational value, but it is the belief of the investors over the accuracy (Armour and Cheffins, 2016). Therefore, the semi-strong form of the efficient market hypothesis was the basis for this development.