Litigation in Takeovers - The Decision-Making Process
University of South Australia - School of Law; Durham University - Law School
July, 31 2009
Australian Bar Review, Vol. 6, pp. 67-80, 1990
The emergence of hostile corporate takeovers in the 1980s attracted considerable controversy that ultimately led to the removal of takeovers from the courts and the establishment of a non-judicial takeovers panel. While the economic significance of takeover activity has been documented, the role played by the law in takeovers had not been so widely discussed. The research on which this article is based was undertaken in 1988, and its purpose was to examine the extent to which, and the process by which, the decision to litigate was taken as a part of the takeover strategies that prevailed at that time. The project involved a series of interviews conducted by the authors, Roman Tomasic and Brendan Pentony; these were held in Canberra, Melbourne, Sydney and Perth with 82 key participants in the litigation process. Interviews were conducted with senior company executives, merchant bankers, regulators, solicitors, senior barristers and judges of State and Territory Supreme Courts and the Federal Court of Australia. In the course of the research we confirmed that litigation was most likely to be launched by the target company, and we learnt that litigation was an almost automatic response. We found that target companies sought time to delay the takeover process and used litigation in order to frustrate or stall the bidder. Litigation was also part of the tactics in a hostile takeover used in order to prepare the ground for negotiation on the price being offered by the bidder. We were interested in the process by which the decision to litigate was taken and, in particular, what factors are taken into account in deciding to go to court. The judicial techniques used in this process were discussed by us elsewhere in: “Judicial Technique in Takeover Litigation in Australia”, (1989) 12 UNSW Law Journal 240-261.
Number of Pages in PDF File: 14
Keywords: Takeover Strategies, Litigation, Corporate Law
JEL Classification: K22, K41, l10, M14Accepted Paper Series
Date posted: August 1, 2009
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