This paper reexamines Grossman and Hart's (1980) insight into how the free‐rider problem excludes an external raider from capturing the increase in value it brings to R firm The inability of the raider to capture any of the surplus depends critically on the assumption of equal and indivisible shareholdings–the one‐share‐per‐shareholder model In contrast, we show that once shareholdings are large and potentially unequal, a raider may capture a significant part of the increase in value Specifically, the free‐rider problem does not prevent the takeover process when shareholdings ar