Motivations of Offeror Company Directors in Corporate Acquisitions
Western Sydney University, School of Law
August 31, 2009
University of Pennsylvania Journal of International Business Law, Vol. 9, No. 1, pp. 67-106, 1987
This paper demonstrates that Prof Henry Manne’s thesis that less successful companies are taken over by successful companies and that the takeover of companies through hostile bids is economically efficient is not a foregone conclusion. Instead, it demonstrates that managers of bidder companies are motivated by a range of reasons in initiating takeover bids, included in which is its value as a defensive strategy to prevent itself from being a target; as a means of getting rid of a product / services competitor; as a means of obtaining additional remuneration benefits given that size of enterprise plays a large role in the remuneration of corporate managers; as well as the possible benefits of insider trading. The need then is to develop a strategy which while facilitating takeovers, will at the same time restrict the downside that accompanies takeover activity.
Number of Pages in PDF File: 40
Keywords: tender offers, hostile bids, target defences, directors duties, motivations, shareholder welfare
Date posted: August 31, 2009
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