This paper develops a model of takeover auctions with a two-step information acquisition process. It shows that the threat of extra information acquisition allows the existence of the signaling jump-bidding equilibrium even when the seller is able to change its reserve price on the basis of the bidding history. The paper shows that although a higher cost of the secondary information leads to a higher expected price, the precision of the preliminary information has an ambiguous effect on the target's expected profit and that such an effect depends on the number of potential acquirers.
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