Efficiency of Takeover Defence Regulations: A Critical Analysis of the Takeover Defence Regimes in Delaware and the UK
22 Pages Posted: 28 Mar 2009 Last revised: 12 May 2009
Date Written: March 28, 2008
Among the prevalent modes of corporate acquisitions, hostile takeovers is quite common. Although earlier such takeover attempts were seen mainly for small firms, it is now employed for large corporations as well, involving multi-billion dollar deals. Due to the fact that hostile bidders making tender offers seek to by-pass the friendly route of negotiations with the target company's managers in order to seek control, it has the potential of upsetting the normal functioning of the target corporation at any time. This poses a threat not only to the shareholders of the target, but also the management, and thus the need to regulate market control in the field of takeover is quite high. However, various jurisdictions differ in the way they tend to control tender offers or hostile takeover bids. This paper attempts to understand the reasons for the divergence in the takeover regulations of the two jurisdictions, namely the state of Delaware, USA and the United Kingdom, and possibly examine the effectiveness of the Delaware & UK laws in regulating defensive tactics adopted by managers of a target firm. Case laws and empirical studies have been examined to study the effectiveness of various defensive tactics employed by managers against hostile takeover bids.
Keywords: takeover, Delaware, UK, takeover code, regulations
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By Mira Ganor