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We examine the wealth effects of economic nationalism (EN) on domestic and foreign rivals of takeover targets using a novel sample of government‐blocked EU cross‐border takeover bids. We report a significant net contagion effect at bid announcement from regression models resulting in a net gain of €3 million for each rival, on average, with domestic rivals enjoying an additional gain of €10 million. Government intervention results in negative returns, which become even more negative at bid resolution, and the adverse effects are felt by both domestic and foreign rivals. All rivals lose a value of €14 million over the total bid period with domestic rivals losing an additional €17.5 million, on average. The source of the losses are not mutually exclusive and can be due to several factors, including lower future takeover likelihood, failure to capture efficiency gains or loss of economic rents. We show that EN has a significant cost, which is not confined to the EU blocking country. [ABSTRACT FROM AUTHOR]