Tender Offers and Disclosure: The History and Future of the Williams Act

Abstract

Since the 1960s, cash tender offers, stock accumulations, and the disclosure relating to such transactions have invoked significant debate. Preceding the adoption of the Williams Act, law and economic experts, like the legendary Professor Henry Manne, argued that cash tender offers and undisclosed stock accumulations help to provide a check on management. Conversely, other experts, including the Securities and Exchange Commission, argued that the lack of disclosure relating to cash tender offers and stock accumulations potentially harmed shareholders. Today, as we approach the 50th Anniversary of the Williams Act, these same arguments for and against disclosure continue to be raised. This paper (a chapter in the forthcoming Research Handbook on Mergers and Acquisitions), details the macroeconomic and M&A environment preceding the adoption of the Williams Act in 1968 and compares it to today’s dramatically different environment. This chapter further summarizes the aforementioned arguments for and against disclosure under the Act, including the impact of disclosure on corporate governance issues. Although the Williams Act has remained static in a dynamic environment, the impact of the existing Act on tender offers, stock purchases, and corporate governance should be comprehensively studied prior to any amendments. In addition, any revisions should be considered on a holistic basis taking into consideration changes in the macroeconomic environment and corporate governance developments since the 1960s as well as the policy arguments raised by both proponents and opponents of the Act.

Keywords: Williams Act, tender offers, disclosure, Schedule 13D, Henry Manne, law and economics, takeovers, hostile takeovers, beneficial ownership, activist shareholders

JEL Classification: K22, K2, D8, G34,