Preemptive bidding in takeover auctions with affiliated values

► Preemptive bidding reallocate profit from the seller to the first bidder and does not affect the social surplus. ► Higher correlation of bidders' values leads to higher preemption rate but has ambiguous effect on the size of the preemptive bid. ► In affiliated value auctions jump bidding may results in expropriation of the entire seller's profit by the first bidder. ► Value affiliation positively affects profit expropriation but has ambiguous effect on the seller's expected profit. ► A significant increase in the value affiliation reduces the seller's expected profit.