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in o te uoen Union’s, European the of sions s, both official and independent, official ands, both e of unlawful hostile takeover hostile unlawful of e
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t to the takeover laws from other selected jurisdictions it providesit from jurisdictionslaws selected other to takeover the t
rate takeovers, such as the German Takeover Guide, as Guide, Takeover German the as such takeovers, rate 3
s practises across the country. Chapter Chapter country.the acrosspractises s CEU eTD Collection acquisitionhostilewhichis a company over takeover. acquired by of control hostile the of approval get to order in board management incumbent company target a of replacement over fight proxy b) and/or board; management incumbent the of priorapproval witho stockholders company target a fromshares of purchase direct a) through: company 1.1 usedinthatjurisdictions.respective are an illustratespossible legaland perspective, and frombusiness its typology takeover, hostile of definitionconventional the provides Thischapter topic. this in interested different approac of number great a is there Thus, jurisdictions. other many and EU the U.S., the in environments economic and legal from practitioners and researchers among debate much 7 6 ‘contested whomembers of replacement a is there scholars the acquire listedsharesstock are exchange. on a takeover. unfriendly through
Ibid. 1, 8 note supra Bannock, and Peacock
Definition and meaning and Definition
The phenome The S company Acquiring takeover Hostile e, enns n dfntos eadn hsie aevr vial t researchers to available takeover hostile regarding definitions and meanings hes, ne curn cmay usually company acquiring ince use
takeover’ contro
term ‘unfriendly takeovers’ be takeovers’ ‘unfriendly term Chapter 1 are
i i loaporaet use to appropriate also is it l loyal to the acquirer. the loyalto
and ‘ non of hostilely taking over a publicly held company is the subject of of subject the is company held publicly a over taking hostilely of non
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T hus throughout the paper terms paper the throughout hus contesting with the the with contesting cause cause ’ 4
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term ‘contested takeover’. ‘contested term sal a ulcy rdd opn, which company, traded publicly a usually
used frequently after acquisition of acquisition after frequently t board members by incoming board board incoming by members board t interchangeably agts compan target’s . It is appropriate also It
‘hostile takeover’, ‘hostile ti 6
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960 See Andreas Cahn and David C. Donald, C.Donald, David and Cahn See Andreas Madric See Jeff
Bidder and bidder offer will be discussed in next chapter as one of the type of takeovers. hostile type of the one as inchapter next willdiscussed be offer bidder and Bidder USA UK and the Germany, in rporations offer for can stockholders be paid the offer securit s in the United States and States United thein s the Issue Detailed analysis Detailedanalysis of One
ies used as a consideration that can lead to lead can that consideration a usedas ies of em croaeri’ i raid’ ‘corporate term stock tostock
regarding provide shareholders with misleading or fa misleadingor with shareholders provide shareholder is hrs n therefor and shares f otse tkoe for takeover contested of a k, Taking America: How We Got from the First Hostile Takeover to Megamergers, Corporate Corporate Megamergers, to Takeover Hostile First the from Got How We America: k, Taking chosen
shareholder of of shareholder t complete and correct rules regarding the info regarding the rules and correct complete takeover may entail the complexity of of complexity the entailmay takeover to economies developed for reasons he determine
jurisdictions. 8 the .
- of
unfriendlyintakeoverthe only New York: Beard Books, 2003), 215 2003), Books, Beard York: New idr n te offer the and bidder n hs cutis Gray n Urie introduced Ukraine and Germany countries. these in a numerous prot
hostile takeover regulation in regulation takeover hostile a a
fairshare price of ection, since since ection, hostile on rules mandatory Kingdom, United the in on later target company would need to to need would company target n some jurisdictions some n e
Comparative company law, text and cases on the laws governing laws governing the on cases and text law, company Comparative
However, with the with However, (Cambridge: Cambridge University Press, 2010), 756 756 2010), Press, University Cambridge (Cambridge: have
motn o eto ht otl tkoe reg takeover hostile that mention to important shareholders
not but with s cash, only
a ite agiig oe bcue f h limited the of because power bargaining little ubr f years of number 5 a
10 ucae f hrs from shares of purchase - per . , hs aqiig opn my bs it abuse may company acquiring Thus,
- ot of most , like Ukraine or Russia, or Ukraine like , financial losses of the shareholders. In shareholders. the lossesof financial shareratio. exchange corporate takeover abuses during during abuses takeover corporate a public offering of the shares, since since shares, the of offering public a lse in lse
early 1990 specifically chose rmation about the takeover deal, takeover deal, the about rmation
f ormation about the acquisition acquisition theabout ormation whom usually holding small small holding usually whom was identify haresacquiring company. of n
countries will be covered covered be will countries s not covered by specific specific by covered not 9 .
regulate this type of of type this regulate
a a real value of both both of value real
target company company target when talking when
their ulations
first the s CEU eTD Collection neet n h business. the in interest will to board incumbent represent of team’ managementineffectual ‘inefficientor market a represent takeovers that view a in governance corporate shares etc. the motivation what company targetthe or priceof market theover economy,premium paya to havemay acquiring entirecompany the for or process the in involved companies fortakeoverraising ex several questions, oblige give 249 (1983): Review 14 http://www.econlib.org/library/Enc/MarketforCorporateControl.html 13 1999) Co. &Inc., 12 11 gain they benefits the othersargue small amount of hypothesis paid premium. operate
See Louis Lowenstein, Lowenstein, Louis See Control”, Corporate for R.“Market Macey, Jonathan R. Arthur 8, 757 note supra David C. Donald, and Cahn Andreas available available
attract shareholders enough time to make up t up make to time enough shareholders
acquiring company to purchase for the verytofromthecompanyfor purchaseshares. acquiring price of same all sellers hr i mc dbt aog coas eeae b te hnmnn f hostile of phenomenon the by generated scholars among debate much is There At the same time same the At schola the of Some a target company in more efficient way and there and way efficientmore in company target of value the Pinto and Douglas M. Branson, M. Branson, Douglas and Pinto 12
stating that stating an acquiring company to offer to company acquiring an
inform around the statement that statement the around
- shares, 334 ation
maximi Pruning Deadwood in Hostile Takeovers: A proposal for Legislation A proposal Takeovers: Hostile in Deadwood Pruning
from although it is true that market can be efficient marketcan be that true is it although a it ,
particular business particular in efficientis Because, opponents do ze the value of value the ze sale s who rs es
not enterprise reflect , but emphasize but ,
with such a control over the business business the over control a such with
of the hostile takeover hostile the of define Understanding corporate law corporate Understanding stockholders setting a price a setting ample whether contested takeovers are beneficial for whether beneficial takeovers are contested ample a premium a . Thus . a otse takeovers contested wh mindsheir
problem 6 The Concise Encyclopaedia of Economics, of Economics, Encyclopaedia Concise The stock corporate
that shareholder that ,
it is logical to say that say to logical is it
who agree toagree who value as a going concern.value a as
. of company of price to stockholders for a controlling controlling a for stockholders to price 13
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benefits that exceed that benefits efficient a a in a daily price settle of of price settle ina daily
economy trading market by useby market trading the ‘efficient market’ ‘efficient the beneficial any failure of the of failure any an an
14 trading , Columbia Law , Columbia
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can the for of of CEU eTD Collection contestedtakeovers. diffe 1. of differen many 1.2 targetand acquitting companies. efficiency businesses. aiming not on out ri 18 17 1 (1987): Review 16 15 nationalpotentialmarketthusthesubjectcompetitors to are regulations. and antitrust distribution. particula a in company the of marketpower the in increase possible a is takeover hostile of thiskind of motives the of One commerce. or industry of sector same the in engaged are parties the sk to beco sk
2.1 Business prospective2.1 Business Ibid. Rock, L. Milton Lipton, Martin Mark hostile takeover
Typol rent categories, such as such categories, rent
us Dollinger, Dollinger, us However, both parts could agree that takeovers results in business value maximizing value business in results takeovers that agree could parts bothHowever, Horizontal take hostile subject a is and forms many takes control corporate over battle The unfavourable n h cnet f business of context the In idsr, s el s n fet f n cnmc o sae n rdcin and production in scale of economics an of effect an as well as industry, r ogy of hosti
fr 16 me a minority shareholder minority shareholder me a om om 18
t acquisition at t discipline t - Corporate Governance in the Age of Finance Corporatism of Finance Age the in Governance Corporate
72 uh custos sal tk pae ewe bsnse ta ae cul or actual are that businesses between place take usually acquisitions Such The Mergers and Acquisiti and Mergers The synergies gains or reduction of the agency the of gains reduction or synergies
The Fair Squeeze Fair The s
from 17
terms. le takeover technic le
business and legal and business s. s 15 This section of the of section This
conglomerate or unrelated and concentric vertical, horizontal, f nfiin cmais bt ahr loig for looking rather, but companies, inefficient of over over Also, researc Also, -
out Compensation Compensation out
is an acquisition of one firm by another firm one is of an acquisition perspective on Handbook Handbook on in otherwise whollyin otherwise
point of view ofpoint hers 7
, thesis (Auflage: BoD (Auflage: raise otl takeovers hostile (NewYork: McGraw
analyse a concern a s . - problem that is beneficial for both beneficial is that problem owned company and being and company owned
– Books on Demand, 2008): 9 2008): Demand, on Books various technics various , University of Pennsylvania Law of Pennsylvania , University
that contested takeovers are takeovers contested that
- be can Hill, 1987): 5 1987): Hill,
that occurs where that occurs classified
of research of of research of and
strategies well
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CEU eTD Collection exposure and totally in involved through acquisition proces technologies are businesses imperfection of company integration” company acquiring the of supplier or supplier a eitherthatare strong with businesses 23 313 2008): Hall, Prentice Pearson Jersey: New River, Saddle (Upper 22 21 20 19 jurisdiction the on depending 1. be can takeover dom hostile respect this In companies. target or acquiring the
2.2 Peacock and Bannock, supra note 1, 9 note supra Bannock, and Peacock Hesterly, S. William and Barney B. See Jay 5 note16, Rock,supra L. Milton Organization of Industrial Handbook K. Perry, Martin Ibid. estic
Legal prospective
Vertical hostile takeover takeover hostile Vertical From t according classified be can takeover unfriendly Also, conglomerate or Unrelated Concentric gettingtargethold company. of
. and 20 is
the of type Such is overseas stabilise an the the a an
interconnected extension of
etcl custo o te opn ta is that company the of acquisition vertical ea popcie otl tkoes a b casfe i variou in classified be can takeovers hostile prospective legal
intermediatemarket. products hostile takeovers takeovers hostile neae uiesatvte,wt the with activities, business unrelated ses
business portfolio of the portfolio of the business acquisitions. . “ 21 supplier
Thus a
product lines,marketthe product acquiring of etc. participation busine , method of negotiation with share with negotiation of method , other.customereach of
, ih ah te th other each with
- – otl tkoe i uuly unde usually is takeover hostile ue relationships buyer t s oia t sy ht n o te oie o sc an such of motives the of one that say to logical is it
is an acquisition that occur that acquisition an is 23 takeover hostile is
– Strategic Manageme Strategic known
s n acquisition an is
8 s bcwr integration” “backward as acquiring company
(Amsterdam: North Holland, 1988): Chapter 4 Chapter 1988): Holland, North (Amsterdam:
– og cmo mre, produc market, common rough .”
An ac An isa 19 nt and Competitive Advantages Competitive and nt
– Therefor nacquisition 314. aim to diversify and reduce and diversify to aim quisition of quisition where the acquiring and target target and acquiring the where
s o the o
a target and acquiring between holders etc. holders e utmr f h acqu the of customer .
22 rtaken it occur it nationality or location of locationof nationalityor
between firms that are thatare firms between th whereas , e company that company e when when s
between parties between Generally there Generally classified as as classified hr is there , 2nd ed. , ed. 2nd “ forwa ways s tion or or tion
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CEU eTD Collection that t contest proxy the of substantialcosts neitherare more efficient board be will sharehold company is director it make to order in votes proxy their use to shareholderscompany change mainly the and movement,economics control target company: over two are 1071 Vol.78 (1990), Review, Law California Contests,” Proxy Towards Policy Legal Analyzing for Framework , “A M. Kahan and Lucian A., Bebchuk, (2001); LawSchool Stanford 206, No. Paper Working Met as Elections and “Sales Schwartz, Alan J.Ronald and Gilson, see 28 27 t of i.e.formation decisions strategic in advance defined meeting for shareholders company’s at behalf in vote one’s to adviser or investment shareholder another to 26 110 No73 (1965), 25 24 meanasto a solve theto leads problem action’ contest proxy
For detailed analyses of proxy fight phenomenon within the framework of Corporate Governance law please law please Governance Corporate of framework within the phenomenon fight of proxy analyses For detailed 11,98 note supra M. Branson, Douglas and R. Pinto Arthur voting Proxy Control”, Corporate for Market the and “Mergers G. Manne, Henry M. Bainbribge, Stephen a costs of the hostile takeover hostile the of costs A a used in the context of of context the in used least used of the various techniques various the of used least main types of of types main
p targe
roxy contest contest roxy offered, nor granted any increase in the value of their shares. invalue their theincrease of granted nor any offered, ifcl t win. to difficult failure of the proxy fights. proxy the offailure
is a formis of . - 27 t 120
, when , company management board management company
Furthermore, a
ers to vote against vote toers
set of other corporate governancesetcorporate other problems of to easier Corporation Law and Economics Economics and Law Corporation professor Henry Manne Henry professor voting passivity contested or
a . I .
proxy fight proxy whereby some shareholder of a company may delegate his or her voting right right voting or her his may delegate of a company shareholder some whereby proxy proxy
t is also im is also t In this case case this In accomplish rx fights proxy
otl tkoes s ma fr h aqiig opn to company acquiring the for mean a as takeovers hostile and and takeovers through which acquiring company can achieves can company acquiring which through takeovers contest pursued an inability to network of target company target of network to inability an an hat Apart from hostile takeoverhostile fromApart , as , portant to mention that target company shareholders mention company that target to portant incumbent management incumbent the the might not be reimbursednotbe might
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an an described by one of the of one by described by share purchase are far greater that costs of of costs that greater far are purchase share by ” fe fi bcue of because fail often . 25 9 contested he management board. board. management he 26
acquiring company must convince convince must company acquiring The acquiring The is for acquiring corporate control. corporate acquiringfor
to voteout to
share purchaseshare ( “[t] Eagan, Eagan, Minnesota
he most expensive, the mostuncertain, mostexpensive,the he takeover. hods for Transferring Corporate Control,” Control,” Corporate for Transferring hods The Journal of Political Economy of Political Journal The a
company opn ilprud target persuade will company , such as , such
s
boa : Foundation press, 2002): 622 2002): press, : Foundation . Proxy Proxy , however , 24 s, proxy fight proxy s, the founders of the the foundersof rd expecting that expecting rd ’s
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Stephen M. Stephen 1.3 1, part chapter Infra J.F. Weston, price endows Share repurchase Tender offer Tender offer Tender
company. As it is well known, ownership of 50.1 per cent of the outstanding votingthe outstanding of cent well ownership 50.1per isit known, As of company.
30
s Bainbridge, Bainbridge,
29
ht a a ujc to subject a was that edr offer, tender K.S. Chung, J.A. Siu, Siu, J.A. K.S.Chung,
have not been regulated regulated been not have
oe coas lo ocdr taseal pt ihs s tp o share of type a as rights put transferable conceders also scholars Some t owner its s such an such or
: Prentice Hall, 1997): 371 1997): Hall, : Prentice
emerged in the the in emerged Corporation Law and Economics and Law Corporation tender bid tender Thus, to acquire a control over over control a acquire Thus,to
isan alternati 31 wit
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ae fnl a on say final a have (New York: Foundation Press, 2002): 652 2002): Press, Foundation York: (New
targe three during the during ) e adoption of the Williams Act of 1968 of Act Williams the of adoption e
of the target corporation.target the of tre cmay uig h hostile the during company target r and auction Dutch a t
major types of share repurchase: share of types major company assets at a at assetscompany target business target codnl acquirer accordingly
company tocompany areholders ofareholders
an 1960 the
open market or privately privately or market open s as a as s a “bidder” fixed t of period
any obtain an n
a , 2nd ed. , ( ed. 2nd alternative to the the to alternative e fateful decisions decisions fateful acquirer can use can acquirer - ) target company company target
specified price specified
a misused s the acquiring acquiring the pn market open Shareholders Shareholders control Upper Upper imposing
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over over the for a) a)
CEU eTD Collection borrowing funds to purchase target’s company shares and then use the target's company cash company target'susethe and then shares company target’s purchaseto funds borrowing is tactics the of One funds. borrowed or leverage of use offer’ t c) common stock the of company’s pricetheresult activities purchase share as of common stock a market the in increase permanent a is there that prove also they price, share to shareholders the to offered controllingminoritythewith company shareholders. acquir the enable offer tender Moreover, lack 36 377 1998): Hall, Prentice 35 34 http://digitalcommons.law.wustl.edu/cgi/viewcontent.cgi?article=2437 Doctrine, Fairness 33 32 generate to acquirer board management company acquired takeoverthatis High time. over debt the out pay to flow ransfers among shareholders and g)ransfers and shareholders among
J.Fread Weston, Kwang S. Siu, Siu, S. Kwang Weston, J.Fread 13e Rule Brotherhood, Randal J. J.Fread Weston, Kwang S. Siu, supra note 35, 379 35, note supra Siu, S. Kwang Weston, J.Fread 1,10 note supra Bannock, Graham and Peacock Alan 2paper. chapter of the see please Act Williams regarding information detailed more For informat of of
that is one of the formsof the of one thatis The empirical studies regarding tender offers show that the size of the premium premium the of size the that show offers tender regarding studies empirical The Corporate raiding Corporate a as offer tender of time specific such mention to important also is It O such e a define can ne o or ion
regulations and and regulations through tender offer: tender offer: through “corporate raiding” Wash. U. L. Q. L. U. Wash. signalling
huge a
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is one of t of one is , Volume 58, Issue 14 (1980): 883 14(1980): Issue 58, Volume , Takeovers, Restructuring, and Corporate Governance, Corporate and Restructuring, Takeovers,
- oto of portion 3 and the Going Private Dilemma: The SEC's Quest SEC's The Dilemma: Private Going the 3 and e) hypothesis;
sell ee be o epd non a reaped to able were ‘leveraged buyout’ ‘leveraged
their stock is about 20 per cent highe cent per 20 about is stock their defence dis a) h e forms of contested takeovers that lead to lead that takeovers contested of forms e dividend or personal taxation personal dividend or cussed below. for more loyal board members that will will that members board loyal more for profit ing company to eliminate the obstacles caused by caused obstacles the eliminate to company ing -
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to 3.1 Stephen M. Bainbridge, supra note 30, 678 note supra M. Bainbridge, Stephen 30, 677 note supra M. Bainbridge, Stephen ef description of existing anti takeover existingef description of anti ated to cause difficulties difficulties cause to ated company’s charter company’s charter
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3.2 Ibid. 44 Ibid. a R. “An John Meyer, and S. Strong John dening - Reactive end p
Another Reactive measures as it was mentioned above above mentioned was it as measures Reactive a is provisions pill poison the of type more One -
, Volume 11, Issue 2 (May 1990): 73 21990): (May Issue Volume 11, , with shareholders company targeted provide plans over
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For more detailed catalog, see RJ Gilson and BS Black, BS and Gilson RJ see catalog, detailed more For
(New York: Foundation Press, 1995) 734 1995) Press, York: Foundation (New s s
with the difference that differencethe with aim at aim
Forthcoming description and policy andForthcoming description tactic 47
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The Law and Finance of Corporate Acquisition, of Corporate Finance and Law The transaction company ” thesis
ta ctics are ctics of the mentioned anti takeover tactics tactics antitakeover mentioned the of
dedica
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CEU eTD Collection the federal government has a strong interest, one of them being a corporate purchase of of purchase corporate a being them of one interest, strong a has government federal the 2. are U.S. the incoveredfollowing in chapter. provisions takeover of layers mentioned of analyses detailed Therefore, takeover levelStatut Antitakeover Delaware (e.g. statestatutes b) 1934), of Act Exchange Securities (e.g. regulations level federal takeover regulations. changingforits provisions policy proposaltakeoveruse practices best to system corporate model a such of points main the analyse to important is it Therefore, countries. bu for base solid a form laws securities and governance corporate the with together and developed 50 49 48 (SEA) 1934 of Act Exchange Securities theis interest particular a ofis means ta of a contested main the are tenderoffer thewith together fightand proxy potential a signalsit since stock, company a in increases ownership shareholders’ monitoring for vehicle important an are solicitationinbethe seen proxy regulations of shares. corporate as such securities, traded publicly
1. Federal level framework level 1. Federal 15 U.S. Code § 78a § Code U.S. 15 1. Chapter 1.1 of See section 11,328 note supra M. Branson, Douglas and R. Pinto Arthur siness growth nationwide and serve as model system of takeover regulations for manyfor regulations takeover of modelsystem as serve nationwideand growth siness aevr euain i te nts tts s osdrd en oe f h most the of one being considered is States Unites the in regulations Takeover One of the federal level regulations regarding proxy solicitation and tender offer that tenderoffer and solicitation proxy regarding levelregulations federal the ofOne a there laws, corporate federal no clearly are there While Phenomenon of hostile takeovers in the U.S. is regulated by three sources of law: a) of threesources isby regulated U.S. inthe takeovershostile of Phenomenon Chapter 2
keover.
-
The U.S. The approachto hostile takeovers 49
e) and c) case law provisions (e.g. Revlon case). case). Revlon (e.g. provisions law case c) and e) 17 s and tender offers. Rules of proxy solicitations tender proxy Rules solicitations s andof offers.
48
The prime example of this interestcan this of example prime The e oee ra i which in areas however re 50 , whichestablished,
of Ukrainian of CEU eTD Collection corporate lawyers discovered another way of a hostilecorporatelawyerstakeover: another way a a tender discovered offer. of merger. potentiaa with a proceed to by board management usedincumbent be could fight proxy the to deal, unwilling a is negotiate board management company target a when case a in however, acquirer, an and board management company target a between negotiations friendly involved that morestatementwords.nothisherinthan proposal of support of or 200 holdermaterial include a security in proxy is to the it required statementboard the opposes of In statement. proxy thein action for herproposal or his include 14a rule SEA Under contest. proxy for requirements procedural provides as well as specified, information the containing statement w furnished shall be meetingshareholder shareholders every that to It prior asserts thatfor applicable contested are the takeover activities. bas the provides and (SEC) Exchange Commission and Securities the 54 53 52 51 inphenomenonthe U.S.:
William J. Carney J. William 35,17 note supra Siu, S. Kwang Weston, J.Fread Carney, J. William 35,16 note supra , Siu S. Kwang Weston, J.Fread Section 14 of the SEA is especially dedicated to the regulation of a proxy solicitation. solicitation. a proxy of to regulation the dedicatedis especially the SEA Section of 14 for[5]newcash A ‘respectability’ tender offer. a affecting of costs reduced tenderw offer the investment, capital actual the Notwithstanding [4] canmore job; doa efficient insurgent that shareholders the convince to contest, proxy in need,as the eliminating Psychology [3] via proxy contest; takeover the to respect with compered when results successful more and Quicker [2] [1]federal Lackregulations of of or extensive tender offer; state o growth rapid the for reasons several suggests Carney J. William majorityof a represented mergers late1960s the Priorto , supra note 51,11 note , supra Mergers and Acqusitions and Mergers hen compared contest; with a proxy -
shareholders to appeal the
(New York: Foundation press, 2000) 536 2000) press, Foundation York: (New - ,ayscrt hle myrqie aaeet to management require may holder security any 8,
18
n tagt olr ad et language, cents and dollars straight in 54 51
53
However, in the mid of 1960s, of mid the in However,
intercompany combinations intercompanycombinations management a when case a aqie t rpae the replace to acquirer l es for the amendments amendments the for es 52
f the tender offer offer tender the f
ith a proxy CEU eTD Collection limited amount of time and without a possibility to obtain adequate information to evaluate evaluate toinformation adequate obtain to possibility a without and time of amount limited respond. special” night oveitsannouncement involved “Saturday called offer tender surprise a was strategies the of One time. of period short very a in offer tender the accept to shareholders the to recommend to seeking was strategy The Hug”.“Bear name industrialsabotage. such of goodexample a as serves businessesU.S. among late1960s in the “takeoverpirate” sabotage. industrial of forms disguised were but businesses,the ofmanagement the improve to desire a not reflect did manytenderoffers behind motives the that clamed that view another was there society, the of interest th serving thus firm, a of board management ineffective but entrenched an removing 57 56 55 Act Williamsthe passed o regulations necessary of inlateleaddisclosure,the absence to enactment the the 1934 1960s. the SEA of amendments of of the to due shares of block controlling decision off the
15 U.S.C. § 78(a), 48 Stat. 881 (1995) 881 48 Stat. 78(a), U.S.C. § 15 Srodes, James and Follon Ivan Ibid.
r hsie aevr taeis rsrtdte eea itrss n nomd investment informed in interests federal the frustrated strategies takeover hostile er, While there was a growing recognition of the tender offer as an effective vehicle for vehicle effective an as tenderoffer the of growing recognition a was thereWhile On July 29, 1968 after the second effort of U.S. Senator Harrison Williams, Congress Congress Harrison Williams, Senator U.S. of effort second the 1968after On 29, July a shares during their a tender of make regarding a decision forcing to shareholders By general the under 1960s the in strategies takeover hostile of variety a were There -
making. All this, together with the different kinds of corporate fraud a accumulating corporate of with different kinds the togethermaking.All this,
57
in the form of numerous amendments of the se the of numerous amendments form of in the Takeovers Takeovers
r the weekend, therefore denying the incumbent board time to incumbenttime board the denyingthereforeweekend, the r
(London: Hamish Hamilton Ltd, 1987) xii 1987) Ltd, Hamilton Hamish (London: 55
h peoeo o te “cor the of phenomenon The
19 to hurry the target company management target board the company hurry to
ctions 13 and 14 ofand14 13 ctions oae adr or raider” porate f ownership ownership f 56 e best best e that ,
CEU eTD Collection (occupation and associates and (occupation acquirer the identifying by i.e. acquirer, stock a regarding information necessary the with trade. shares the which on exchange principal formoftosentsuch the a shall company be threshold. reachingthe centthe Copies 13D withinthe after 5per of period with SEC 10days Schedule file to stock company’s held publicly the of more or cent per 5 accumulated had takeovers hostileof systemearly warning an withshareholders open;the andsue c) permitting the target clearly to company company. bidding during time of period minimum a providing b) outstanding offers; evaluate to them allowing shareholders, and board management target’s the for attempt takeover the about information generating a) by: shareholders company’s target the “make to was facts purpose relevantfairmakeso have that shareholders known a to their opportunity decision.” act’s the Williams Senator to According 1934. of SEA the 61 60 18 1998); Hall, Prentice (New Jersey: 59 Alternative 58 company target a isalter to main purpose Its 13G. filing Schedule requires and reachedwas (g) 13 Section Act. of cent applies of to 5per all owners Williams the of (g) 13 Section the of 13D of instead 13G Schedule the target shall be company revealed. regarding company acquiring the of plan business the company, target the over controltake tois theit acquisition of that purpose turns out If disclosing a shares acquisition. of a purpose
17 CFR 240.13d CFR 17 (1982) (d) U.S.C. §78 15 Siu, A. Juan Chung, S.Kwang Fred Weston, J. Guhan Subramanian, A New Takeover Defense Mechanism: Using an Equal Treatment Agreement an an Agreement Treatment Equal an Using Mechanism: Defense Takeover New A Subramanian, Guhan Broadly speaking it is correct to say that the Williams Act Williams the that say to correct is it speaking Broadly If the equity securities were obtained by institutional investors they can choose to file tocan choosetheyinvestors institutional by obtained were equitysecuritiesthe If and board management target’s the provides Act Williams the of (d) 13 Section
to the Poison Pill, Poison the to
The Delaware Journal of Corporate Law, Issue #23 (1998); 375 (1998); #23 Issue Law, of Corporate Journal Delaware The ), distinguishing sources of financing of the shares purchase and purchase shares the of financing of sources distinguishing ),
61 company shares, in spite of how the 5 per cent threshold how per threshold the cent in 5 spite of shares, company
Takeover Restructuring and Corporate Governance, 2 Governance, Corporate and Restructuring Takeover
whose shares havethe to shares well whose been obtained as as 20 60
Schedule 13D provides a target company target a provides 13D Schedule
hc a edr fe ms b held be must offer tender a which , by requiring any person who person any byrequiring ,
provides protection for a a for protection provides
59
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ed 58
CEU eTD Collection prospective stock exchanges shall be conducted followed by a telephone notification.prospectivefollowedtelephone exchanges conducted stock shall by a be the of compe relevant a and date company target a to the on practicable as hand soon be shall schedule a such “[A]s of copies offer…”and tender the commencementof SEC the with filed be shall schedule prior or agreement any as well as company, 14d Schedule a is which Statement, Offer Tender a disclose shall company acquiring the Thus, securities is obliged thet registeredtheunder 1934 SEA Section 12of of of cent per 5 than more of ownership in resulting shareholders company’s targetmakesinvestorsto recommendation a group a that solicitation or this the any of section months. 12 within shares company’s cent per 2 than less ofacquirers theto applynot obligationsdo still can shares target’s of amount extensive the this, of spite In time. over acquisition creeping a to 67 66 65 64 63 62 ob also section this sought, shares the holdersof all to opened be shall tenderoffers “allholdersrule” the Act provides Williams the addition, Section 14of withdra to right have a target company a of shareholders accepting bid, the of close the afterseven days terms. its change will company bidding the by prolonged be might
Rule 14d Rule U.S.C §78n(d)(5) 15 14e Section 14d Section 35,19 note supra Siu, S. Kwang Weston, J.Fread 14d 240. CFR 17 - ,icuig h curn opn’ itninadbsns ln eadn h target the regarding plans business and intention company’s acquiring theincluding 1,
Once the tender offer is made, it shall stay open for at least twenty business days that days businessleast twenty atfor open it stay made,shall is offertender theOnce Section 14 of the Williams Act also specifically covers public tenderof public covers specifically Actalso Williamsthe of Section14
be accumulated over years without filing the Schedules 13D or 13G because filing because 13G or 13D Schedules the filing without years over accumulated be - 10 of t ter cetne wih nbe te t tne it a optn bid. competing a into tender to them enables which acceptance, their w - - 1, 15 U.S.C. §17n(d) §17n(d) U.S.C. 1, 15 2, 15 U.S.C. §17n(d) U.S.C. §17n(d) 2,15 he SEC he
bidding company and will be automatically extended in case the in case extended automatically be will and company bidding
65
titive bidder, as well as mailing of the schedule to schedule the of mailing as well as bidder, titive
For sixty days after the bid commences or up to up or commences bid the after days sixty For 21
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o file Schedule 14D withfile the Schedule SEC. o 14D 67 , according to which, according fers. - 63 delivered 64 62 liges an liges
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66
In CEU eTD Collection level regulations are interesting legal devices that supervise corporate takeovers in each each particularin instate will discussed and therefore details be takeovers corporate supervise that devices legal interesting are regulations level state Such U.S.the in activities takeover on statutes state also are there takeovers, corporate of type that receiving holder security other consideration.” any to paid is holder security any to paid i consideration of shares.theirfor highestprice the receive also increaseshall price offer thebefore bid ainto alreadytendered tender a while price offer an of increase the Act. Williamsthe (e) istender of Section 14 whichregarding fraudulent anymanipulations offers, practices and anti the also is There purchase. to wantscompany acquiring an than offer theinto tendered arecompany target the sharesof pro the on shares company target a purchase to companyacquiring 72 §78n(d)(7) 17 USC 71 70 69 68 to power a have management states Hence, board. its and shareholder of and obligations firm’s powers, rights takescompanies of chartering the therefore laws, their to subject person legal a as company a define states 2.
2. States level takeover statutes anti 2. States Andreas Gohn and David C. Donold, C.Donold, David Gohn and Andreas USC §78n(d)(7) 17 U.S.C §78n(e) 15 14d Rule AND 14(d)(6) Section J.Fread Weston, Kwang S. Siu , supra note note , Siu supra S. Kwang Weston, J.Fread In the U.S. the corporate activities are primary regulated by the states and thus the the thus and states the by regulated primary are activities corporate the U.S. the In is covering regulations federal the from apart above, mentioned was it As 71 70
place in individual states.individualin place
gvn i i ufcety ar f []e ihs osdrto fec type each of consideration highest “[T]he if fair sufficiently is it given, s 69 The so called “highest price rule” also specifies that if more than one formone thanmoreif that specifies rule”also “highestprice called soThe
issue It is also vital to mention the provisions of the Williams Actconcerning Williamsthe of mentionprovisions the vital to isIt also
oprt anti corporate - 8 of the SEC of the 8
Comparative Company Law Law Company Comparative - ru poiin rhbtn miss prohibiting provision fraud
35, 26
- aevr euain, hc nntees r not are nonetheless which regulations, takeover 72
22 Company charters obtained from states define adefine fromstates obtained Companycharters i i pn rvdn htsaeodr who shareholders that providing open, is bid
in flowinginsection. (Cambridge: Cambridge Press, 2004): 774; 2004): Press, Cambridge (Cambridge: - ratabasis aeet omissions, tatement,
68
in case morecase in sues of of sues CEU eTD Collection mn tne ofr ate ad eeal wr a udn n nesae omre A a As commerce. interstate on burden a were generally and parties conflicts offer many tender developed among which states, different of statutes several to subject be might companies to applicable also were states. other in and incorporated offer tender legal the the thwart with directly company to target possibility a provided statutes These disclosures. the of adequacy to attempt and Act generationsGenerally define three state scholars anti of in the to protection giving by application statutes. takeover own their issuing started states Act, Williams the passing the after However, assets. of sale or busi consolidations fundamental such regarding regulations only providing interstate commerce. a 78 77 76 (2002) 75 74 73 votingfollowingissues: thecovered andprotection notstate.fromto the companies outside lim case inthe on unconstitutional decisions declared was that statute Illinois the is invalidation this of example One law. federal under Supr U.S. the consequence, toie t b i a ofit ih eea rgltos o moe etitos regarding restrictions impose to regulations federal with conflict a in be to uthorized
William J. Carney, supra note 51,14 note supra Carney, J. William 45.57.010 §§ State See Alaska 51,13 note supra Carney, J. William Ibid. 457 U.S. 624 (1982) 624 U.S. 457 11, note supra M. Branson, Douglas and R. Pinto Arthur
Until the 1970s state laws were characterized by their silence on corporate takeovers, takeovers, corporate on silence their by werecharacterized laws state 1970s theUntil h second The Williams the as way similar a in designed were statutes state of generation first The ited the application of state statute to companies incorporated only in the state and state the in only incorporated companies to statute state of application the ited
regulate tender regulate - 73 eeain ttts ee oty eiae t disclosure to dedicated mostly were statutes generation
- 45.57.120 (2000), Tennessee Code Annotated §§ 48 Annotated Code Tennessee (2000), 45.57.120 statutes takeover these of elements many invalidated Court eme 77
h re The
Edgare v. MITE Corp. Edgare v. b offers 74 sult of this legislative approach was that tender offers tender that was approach legislative this of sult
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- s moeigsaeamnsrtr orve the review to administrators state empowering y out the from companies tate 23
332 rules of takeover mergers;voting powers takeover of rules
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CEU eTD Collection approval by the targ the approvalby so the votingtheseshall be denied. rights o stock outstanding of cent per twenty than more holding shareholders the disinterested the unless of rightsvoting meeting, the shareholders that the during authorize, company the ofshareholders provided statute Indiana’s corporation. the acquire to bid a of shareholders disinterested the majorityof the of approvalobtain to company acquiring America. inadoptedI so the was statutes these of effective most the of One offer. tender a on decision makinga when creditors and employees of interests thealso managemetheThese statutes required company. target the over control acquired who bidder a to shares minority their put of to shareholders rights and shares company target the of block big a holding shareholders of 82 2000) Supp. 81 6 col. 1987, at.1, 1, July Journal, 80 79 five a so The protection. wh employees and itscreditors of interests the account into taketo companytarget the of board acquirer. the
See Annotated Code of Indiana § 23 § of Indiana Code See Annotated See Corporations and Associations Article of the Annotated Code of Code Annotated Article of the Associations and Corporations See miller, W. See Michael 69 (1987) U.S. 481 See iletakeover considering a bid. - - year moratorium on a merger of a target com target a mergerof a moratorium on year called “faire price statutes” that require a supermajority voting procedure of takeover of procedure voting supermajority a require that statutes” “faireprice called h third The secondAnother the example of 79
ndianatheupheld U.S. byCourt Supreme and ne te nin cnrl hr aqiiin ttt i ws biaoy o an for obligatory was it statute acquisition share control Indiana the Under 81
Also, there were “stakeholders statutes”, which pre which statutes”, “stakeholders were there Also, - - eeain ttts et vn ute i in in further even went statutes generation called “freeze” statutes, like the one in New York or New Jersey, provide provide Jersey, New orYork inNew one likethe “freeze”statutes, called et company shareholders unless they each obtain the best the obtain each they unless shareholders company et
How Indiana Shielded a Firm and Changed the Takeover Business Takeover the Changed Firm a and Shielded Indiana How
- 1 82 - 80 35
- 1 (Michie 1999 & Supp. 2000) & Supp. 1999 (Michie 1
nt board to consider not only shareholders interests, shareholders not but tont only consider board - generation statutes regarding takeovers inU.S. the are regarding generation takeovers statutes 24
- called “control share acquisition” statute statute acquisition” share “control called pany with a hostile acquirer (second acquirerhostile a with pany
in
Maryland §§ 3 §§ Maryland
CTS Corp. v. Dynamics v. of Corp. Corp. CTS
- - state target companies’ companies’ target state mtdte management the empted - 602, 3 602, - ,Street Wall f the company, company, the f 603 (1999 & & (1999 603 - paid price by price paid - step
CEU eTD Collection 2.3 management share percentage. board a certain of purchases over rule combination business a regarding provisions has statute date effective its of days ninety within statute the of out opt the of to vote peculiarity to allowed is Delaware One in incorporated company a that is statute takeover Delaware transaction. the with proceed to shareholders company target tw with together boardmanagement company target a approvalof obtainthe may acquirerhostileThe corporation.target the of shares the virtuallyall acquirerpurchases mora home.” legal their as Delawarehave chosen 500 Fortune the ofcent per 60 “[m]oresince per of than cent all publicly 50 D of Delaware.Provisions acquisitionitself. the before merger the approves board management company target the unless transaction) 87 86 85 31,2014) March (assessed 84 83 stat 15 and courts circuit 13 of out 12 favourablyby cited been have and borders state the influence beyond carry takeoveractivities hostileregarding its rulings Court and of Chancery publicly of cent per incorpor Americanare 50 then more since law, case Delaware by heavilyinfluencedis U.S. the in takeoverslaw. law on corporate Case case regulated by state
Supra note 83 note Supra of Delaware, State The Delaware General Corporate Law § 203 (West 2013) (West 203 Law § Corporate General Delaware 2013) (West title 362(a) § 8 Annotate Code Delaware 2002) Supp. (McKineey 912 Law § Corporation Business York New
State case law hostile on State takeover activities oim n second on torium nte sae ht olwd h sm apoc t te anti the to approach same the followed that state Another pr fo fdrl laws federal from Apart
83
About Agency, available at at available Agency, About
ated inDelaware. the ated - tp rnatos s he yas n i de nt pl i te hostile the if apply not does it and years three is transactions step
elaware takeover statute shall be regarded with great significance, greatwith regarded be shall takeoverstatute elaware
and state takeover statutes, hostile takeovers are also also are takeovers hostile statutes, takeover state and 87 - http://www.corp.delaware.gov/aboutagency.shtml 25 traded companies in the United States includinginUnited thetraded States companies
Delawaretheflexibility of and experienceThe
. 85 86
Also, Delaware’s takeover Delaware’s Also, eurn apoa o the of approval requiring - - takeover statutes was was statutes takeover rd croain in corporations trade 84 o
- The DelawareThe third votes of third
e CEU eTD Collection applicability to the management boards’ actions during a contested takeover. The court court The followingconducted case: of the analysis takeover. contested a during actions boards’ management the to applicability analyses court the Thus, job. their lose might members board management takeovers, hostile successful of case in since takeover, hostile froma tactics defensive regarding decision makinga b while shareholders company’s interest of conflict the recognizes court the hostileis takeovers defensive against tactics thethatis purpose this thesis de of the and rule judgmenttest.fairness intrinsic business the of scope the within actions directors’ for adequacy h a of course the in review actions board management for corporatetakeovers. courts. 92 91 90 Review? Proportionality to Substance 89 Others? then Equal More Shareholders Era: Are Some 88 Mathes v. Cheff
199 A.2d 548 (Del. 1964) (Del. 548 A.2d 199 Ibid. 1985) (Del. 946 A.2d 493 Kraakman, & Reinier Gilson J. Ronald See & M. Muir Dana See
88 Throughout the 1980s Delaware courts developed so developed courts Delaware 1980s the Throughout the risk of no consumption, and the quality of securities being offered in the the in offered being securities of quality the and consumption, exchange. no of risk generally), the community the even perhaps and employees creditors, (i.e. shareholders of timing th and nature offered, prior the of inadequacy include may concerns such of Examples enterprise. corporate the on itseffect and bid takeover the natureof the of i rule, corporate regarding Court Supreme Delaware the of decisions landmark the of One y co By
e offer, questions of illegality, the impact on "constituencies" other than than other "constituencies" on impact the illegality, of questions offer, e lawoncase Delaware to dedicated bewill section inthis discussed Therefore,cases t must be reasonable to the threat posed. This entails an analysis by the directors the analysis directors This by threat an entails the posed. to must be reasonable t cuig ih n nlss f h sadr bsns jdmn rl cetd in created rule judgment business standard the of analysis an with ncluding judgment business the of ambit the within come to is measure defensive a If 92 91
the court enacted a two a enacted court the Cidny A. Schipany, Schipany, Cidny A.
89
Hence, there are several court decisions that are very important forimportant very are that decisions court several are there Hence,
, 44 BUS. LAW. LAW. 247(1989) , 44BUS. scribed infollowingsection. the scribed New Standards of Director Loyalty and Care in the Post in Care and Loyalty of Director Standards New Delaware’s Intermediate Standard fo Standard Intermediate Delaware’s
- Unocal v. Mesa Petroleum Co Petroleum Mesa Unocal v. tp ett eemn hte te management the whether determine to test step 26 , 8 N.Y.U.J. Legis. & Pub. Poly 297, 354 (2005) 354 297, Poly Pub. & Legis. , N.Y.U.J. 8 h sadr bsns jdmn rl ad its and rule judgment business standard the
ten h mngmn bad n the and board management the etween
ostile takeover, creating tests of of tests creating takeover, ostile - called “intermediate standards” standards” “intermediate called
r Defensive Tactics: Is There There Is Tactics: r Defensive . 90
In this decisionIn - Enron Enron
CEU eTD Collection board substantial latitudeboardtactics. substantial the judicial scrutiny by allowing some of si the in Int’l, Inc. inthelegality defence of pill aUnocal accepted the court poison test the proportion was takeover of thethreat to response board’s management the whether analyse to court the allows test Unocal the of step second the while attempt, takeover hostile the investigation of reasonable a after proof.directors’ the enhanced company target the with unaffiliated materially directors independent of majority the of actions board management supporting decision a of presence the that declares also the that host b) the of threat posed the and to reaction reasonable is a defensive effectiveness tactic and policy corporate to danger of existence the in believe to grounds reasonable are there that prove a) shall: board management the tactic, defensive not.implementThus, whenhostileboard can againstenacting tactics takeovers or defensive 96 95 94 93 – white found knight favour a initial and bidder the managementnotcompany to board decided considered be not could levelthat the to bid the priceof these anti of Implementation takeover. the avoidto effort in an Revlon of millionsshares for 10 tender anti several implemented result a as Inc.. applic the
managementwhichthe companyForsmannLittle,a competitive to target board. bid offered 500 A.2 500 11,320 note supra M. Branson, Douglas and R. Pinto Arthur 1346 2d. A 500 955 2d. A 293 96
In this case, Revlon’s management board found the offer of the bidder inadequateandbidder the of offerfound the boardmanagement Revlon’scase, this In A year later, after the Unocal decision, the Delaware Supreme Court was faced with with faced was Court Supreme Delaware the decision, Unocal the later,after year A uto fa otl aevrada eut h nclts gvste management the gives test Unocal the result a as and takeover hostile a of tuation d 1346 d - 94 ation of Unocal’s two Unocal’s of ation takeover tactics had a positive affect on the tender offer bid and increased the increased cash and bid tender offer the on affect had positive tactics a takeover
However, the court rejected the idea that the managementHowever,thattherejectedidea board the be passive the should court
93
The first step focuses on the focuseson step first The
- step test in test step l r o. t s lo motn t mnin ht ne the under that mention to important also is It not. or al - aevr atc, uh s pio pl pa an plan pill poison a as such tactics, takeover Revlon, Inc. v. MacAndrews & ForbesHoldings, & MacAndrews v. Inc. Revlon, 27
management board acting in a good faithgood a in acting boardmanagement
as inadequate. However, the target the However,inadequate. as ile takeover. The court court Theiletakeover. Moran v. HouseholdMoran v. 95
self d a CEU eTD Collection n. . ie Inc. Time, v. Inc. the stockholders.” benef the for highestprice “[t]hefor seek to have they so and inprogress is company a the“auctioneer”soon of sale asmanagementan as target board words,the becomes company from switched duties board’s management the sale, preservation a for up put been had company the fiduciary once since their duty, had breached managementRevlon’s board that heldcourt management Revlon’s sued bidder initial the Accordingly, bidder. initial the trumping up ended effectively thus favoured board management company target the by transaction of divisions valuable most the buyout to rights Little Forsmann give $25 c) and fail; a bid of case in pay fee cancellation b)million bidder; another for look not would Revlon which to according provision” bid, a such for return in Nonetheless, 99 98 97 company target to offered premium a is there because only company the sell to board the court a result, Ascompany. planned a not was there case case Time’s in Revlon that are court and to according Time the between differences distinguishable main the of One threat. of reasonableness the analysed court Then, company. targetthe faced by threat onlythe not were bidder the usedby tactics coercive the inadequateand value foundthatan and companyfortarget the threat possiblefor looka first court The apply. would case Revlon the by established obligations
571 A.2d 1140 (Del.1989) 1140 A.2d 571 Ibid. 1986) (Del. 182 173, A.2d 506
n ltrdcso f h Dlwr urm or in Court Supreme Delaware the of decision later a In of the target company to maximization of stock value to its holders. In other other In holders. its to value stock of maximization to company target the of 98 99
h cut lrfe crusacs n hc te aaeet board’s management the which in circumstances clarified court the or frbec f iuir uy A rsl f h ltgto, the litigation, the of result a As duty. fiduciary of breach for board
elna icutpie f h fe fail. offer the if price discount a at Revlon
held that there are no general obligations on the management the nogeneral obligations on there are held that te agt opn are t: ) in n shop “no sign a) to: agreed company target the ,
the target company’s defences dependent on the on dependent defences company’s target the 28
Paramount Communications, Paramount
sd h nclts to test Unocal the used breaks 97 osan ite and Little Forsmann
Approval of such of Approval
po h target the of up it of of it CEU eTD Collection aevrtcissc spio il rbyust hatpsil otse aevr. The takeovers. contested possible thwart to buyouts or pills poison as such tactics takeover managemen company’s target a clarifying Court Supreme the so f are there if and offer tender a during value negotiated a justify to able be must board management Inc. Network, QVC v. Inc. Communications Paramount takeover procedure, as hostile a during board management company’s target a of duties clarifying Court Supreme the o regarding shareholders theto available information levelof the a) for example: table, onthe valueisfactorsmaximization whiletakeover tender offer share consider the other canbesides of upset cause would company plan. business company’s the of sale such when price, fair at even stockholders, 105 104 11,324 note supra M. Branson, Douglas and Pinto 103 102 101 100 two boardmanagement a provide a case);takeover (Unocalcontestedmeasures against appropriate provide cases The litigations. court of outcome the they since takeover, the a takeovers the of inparts both of actions possible frameworkof determinea bidders as well as boards management companies’ target notshouldin to order b be draconian anti that ruled court
673 A. 2d 34 (Del. 1994) (Del. 34 2d A. 673 1989) (Del. 1153 1140, A.2d 571 651 A.2d 1361 (Del. 1995) (Del. 1361 A.2d 651 Communic Paramount of the analyzes For detailed See Arthur R. Pinto and Douglas M. Branson, supra note 11,322 note supra M. Branson, Douglas and R.Pinto See Arthur Ibid. 1387 Ibid. fferthetimingtheand and the offer b) conditions offer. of - called“armlength bargain”. In the beginning of 1990’s there were two more important decisions of the Delaware the of importantdecisions more two were there 1990’s of beginning the In The importance of the court decisions described above is widely recognised by a a by recognised widely is above described decisions court the of importance The Corp. General American v. Inc. Unitrin, wcmeiossmlaeul idn,alo hm hl etetd ary hs is this fairly, treated be shall them of all bidding, simultaneously competitors ew - 1388
- hostile takeover tactics shall be within the range of reasonableness and reasonableness of range the within be shall tactics takeover hostile
well as extending possible anti extending possible as well
100
Thus, it means that a management board when facing a hostile facinga when board management a that means it Thus,
103 e permissible
ations 29
104 105 Inc. Inc. v.
. Delaware the of case leading another is - takeover measures. One of them is theis them of measures. One takeover
QVC Network, Inc. please see Arthur R. Arthur see Inc. please Network, QVC
102 bads aaiy o s anti use to capacity board’s t
in which the court held that a that held court the which in 101 - step test when determining determining when test step
nd help to predict predict tohelp nd - CEU eTD Collection anti hostiletakeover fighting and broadeningavailable management when against board’s duties a tendethe consideringwhen auctioneers asact to dutythe with
- takeover(QVStactics and Unitrin cases). 30
r offer (Revlon case); clarify a clarify case); (Revlon offer r CEU eTD Collection adapt its legal system to the EU standards. Therefore, the first part of this chapter provides an first this chapterTherefore, provides the of part to EU itslegal standards. the systemadapt to EU the of countries associated obliging Ukraine and EU the with agreement association i Particularly regulations. takeover Ukrainian in policyproposals provides finalchapter its since thisthesis, ofpurpose legalthe for important especially system are German by developed regulations takeover model with together directive takeover of analysis detailed a Thus, MSs. EU other in regulations takeover of development theimpact on great has a approach German EU. the Hence, the within influenceand political activit takeover German to the approach influenced greatly by models are time, same takeover MS’s the At flexibility. and diversity of balance optimal an keeping time same the at and extent comprehensive a adopted EU harmon takeover directive the States, United the unlike However, way. significant a in vary can issue this covering laws consequently and activities takeover to approaches 107 106 Professor by prepared report first the 1974. in with Pennington starting debates judicial and political of wide bythe 3.1 to approach German the to corporatetakeover regulations. dedicated section second the by followed MS, the among influen its and takeovers EU of analysis
John Armour and Joseph A. McCahery A. Joseph Armour and John (EC) 142/12) (L O.J. Bids, 2004 On Takeover 2004/25, directive Council
European Union framework takeover hostile on Union European ies due to its comprehensive development, constant updates and Germany’s economic Germany’s andupdates constant development, its comprehensive to due ies n h Erpa Union European the In Chapter The European Union frameworkthatregulatesEuropeanThe Union - ranging Directive on Takeover Bid Takeover on Directiveranging 3
– 107
The
h Drcie ini Directive The
izing takeover activities in 28 EU Member States (MS) to a certain a certain to (MS) States EU Member in 28 izingtakeover activities EuropeanUnion approach hostile to takeovers
E) hr ae nme o jrsitos n ah f which of each in jurisdictions of number a are there (EU) , in, fra note 15, 14 15, fra note eo h eeomn fte aevr regulations takeover the of development the on ce ily a aotd o rvd te aevr rules, takeover the provide to adopted was tially 31 106
was adopted in 2004 after almost 30 years30 after almost in 2004 adoptedwas
issues of a hostile takeover represented takeover represented hostileissues of a
n light of a recently signed signed recently a of light n
the EU the CEU eTD Collection specifically choose this approach to the hostile takeovers using term “ termusing takeovers hostile theto approach this choosespecifically Directive The company. target of board management the with consultation prior without host the of techniques various are there thesis this of chapter first the from see can we As takeover. EU. facilita well as shareholders, as minority protecting especially takeovers for rules legal common provide to are objectives market.” singleEU’s the useof optimal industry Europe’s integrating and consolidating for mechanism a offering listed companies, on bids takeover for “[c]reaterules to was directive takeover thein mainobjective Winter’s Jaap Professor in2011, (EC) European Commission onemainitsMS.the EU of to accorded benefits ofthe crucialmarketinternal being as element EU a the which ofregarded sustainable development 111 110 (SPEECH/02/449) 109 2002 October, 2 Parliament, European bid”, takeover on proposal “New Bolkestein company 108 target from of One takeover. contested stock a of tactic another as fight of proxy covering not and shareholders purchase direct through conducted takeovers hostile direct the activities, takeover of form main a as bid law…” national with accordance in company offeree the of of control acquisition the objective its as has or follows which voluntary, or mandatory whether or all acquire tocompany a of securities the holdersof theto made itself) company offeree the by than (other offer public “‘…a as: “bid” or defines bid” “takeover 2(1)(a) Article Thus, activities. takeover describe to offer” “tender terminology
The Winter takeover report p.18, and the Commissioner’s speech to the European Parliament: see F. see Parliament: European to the speech Commissioner’s the and p.18, report takeover Winter The ibid 104 note Bid, supra Takeover on Directive but heaven to go to all ant “We Winter The 110
As it was stated by the head of the High Level Group of Ex of Group Level High the of head the by stated was it As It is interesting to see the Takeover Directive’s approach to the definition of a a of definition the to approach Directive’s Takeover the see to interesting is It ile takeover, one of which is a purchase of company’s shares from its stockholder stockholder its from shares company’s of purchase a is which of one takeover, ile
ting takeover rules to truly integrate the capital markets of the markets integrate of capital the truly rules to takeoverting , preamble preamble ,
nobody want die” [2004] European Company Law 4 Law Company European [2004] die” want nobody 109
Also, the Preamble of the Directive states that itsthat statesDirective the of Preamblethe Also, 32
nodrfrErpa uiest make to business European for order in v hs iis t plcblt ny to only applicability its limits thus ive 108
some of those securities, securities, thoseof some 111 perts appointed by the the by appointed perts takeover bid takeover
By defining takeoverdefining By
”or
in US in CEU eTD Collection some point controversial to each other. Such legal instruments are: a) board neutrality, b) a b) neutrality, board a) are: instruments legal Such other. each to controversial point some at and takeovers hostile of system American the to opposite almost are which instruments, bidsissuedthe on securities banks. MSs central by takeover toapply not doesalso directive The activities. their ofmainobjective the public,as bids the of shares the takeover to of a not apply doeshowever the directive some MSs, several inlisted one or company are or all where MSs EU the of law the by governed companies tak to relate that markets’ the regulate to authorised officially organisations by established arrangements … [and] practices… of codes provisions, administrative regulations, [l]aws, “… coordinate independently.fight,activities,toaMS proxy the such of as each authorities cross facilitate di the of limitation such for reasons the US the (`Oxfo and Europe in Regulation 115 114 113 t a as directive takeover the with law, 112 perspective. choice shareholders the b) and approach defence board management the a) thought: of groups two in divided be can phenomenon 3.1.1 below. discussed be will regulations takeover on influence their and directive takeover EU the of ma
Beate Sjåfjell, Sjåfjell, Beate John Armour and Joseph A. McCahery, After Enron: Improving Corporate Law and Modernising Securities Securities Law Modernising and Corporate Improving Enron: After McCahery, A. Joseph Armour and John I 1104, Art. note Bid, supra Takeover on Directive ndatory bid rule and c) a breakthrough rule. Description of such innovative legal devices legal innovative such of Description rule. breakthrough a c) andrule bidndatory bid
n euiis sud y opne, olcie netet f aia poie b the by provided capital of investment collective companies, by issued securities on Board neutralityBoard
According to some scholars, debates in corpo in debates scholars, some to According fromdefinitio Apart The scope of the directive d directive the of scope The oe bids...” eover - Towards a sustainable European company law: A normative analysis of the objectives of EU of EU objectives of the analysis A normative law: company European sustainable a Towards border takeover transactions, thus leaving further complications of takeover of complications further leaving thus transactions, takeover border
113 n of the takeover activities, the directive also provides other legal provides other directivealso the takeoveractivities, the nof
ue o te ietv apy o aevr is o sae of shares for bids takeover to apply directive the of Rules est case, case, est rd and Portland, Oregone: HART Publisher, 2006), 562 2006), Publisher, HART Oregone: Portland, rd and efined in Article 1 states that the directive is meant to to meant is directive the that states 1 Article in efined Vol. 3. (Kluwer Law International, 2009), 299 2009), International, Law Vol.3. (Kluwer etv cp mgtb h ietv’ betv to objective directive’s the be might scope rective
33
114
rate governance theories over takeover over theories governance rate 115
codn t te or defence board the to According 112
CEU eTD Collection The same article of the directive requires the management board to issue its opinion opinion employ its company’s target the issue of consultation the to requires as well board as managementbid, a regarding the requires directive the of article same The bids company.” offerree the of impedimentlasting to acquiringin the control which offeror’s may issuing result a any shares action… any taking “… from refrain to as well as attempt, takeover a during neutral stay to company target the of board management the requires thus and approach second followsthe directive the takeover Therefore, position. their from not shall them board management dismiss might company the of owner new self are boards management perspective, techniques takeover anti enact to be able and company the to protect in position the a better the one be management shall board thus attempt, takeover the during decision informed an make to unable are company coo limitedofexpedience, the duetoapproach, 119 118 117 116 general a through meeting.shareholders measures antitakeover implement to permission a get they if attempt takeover contested the neutral during stay to havenot will boardmanagement the that states most anti popular thewhere“poison are plans pill” anti knight” theusage allows directivesay specifically so ofThereby, that the is it to correct
Ibid. Ibid. Ibid. 9(2) 104, Art. note Bid, supra Takeover on Directive
in order to ensure the highest possible price for the target company’s shareholders. company’s target the for price possible highest the ensure to order in
- aevrdfne n fris sg fte pio il ln, niete U.S. the unlike plans, pill” “poison the of usage forbids and defense takeover which may result in the frustration of the bid and in particular before before particular in and bid the of frustration the in result may which 119
116 alternative seek to allowed is board management a However, e loe t idpnety rae n dfne. h EU The defences. any create independently to allowed be . On the contrary, according to the shareholders choice choice shareholders the to according contrary, the On . - interested in their response to a takeover, since the since takeover, a to response their in interested 34
rdinated problem etc. stockholders of a target a of stockholders etc.problem rdinated
- takeove r tactic. Nonetheless, the directive the tactic.r Nonetheless, - called “white called ees. 118 117
CEU eTD Collection ensure the moremonths the 12before not than bid” and “…[shall]nottimehoweverlessthanthatshallsuch be be determined byperiod each six MS, pai “…[h]ighestprice definedas calculation. its of price an equitable shares at remaining shall the acquirer purchase threshold who the method exceeded a as well as company, target the over control confirm shares. company’s target of rest det to the require are MSs directive, theto According purchase to company the over control her or his that confirms shares target company’s a of threshold ownership a certain whobidder exceeds rule” “mandatory the bid provides the directive 5of Article thus company, target shareholders a of 3.1.2 125 124 123 122 121 120 thethereforeinfluencenot company development. effectively the can and company’s hold real controlwithout over they the shares since in to tender bid, regard tendertheir shares not didwho stockholderscompanytarget formechanism an exit is provide to scholars, some equitable an such adjust
Ibid. Art. 5(1), Art. 5(3) 5(1), Art. Ibid. Art. 5 104, Art. note Bid, supra Takeover on Directive John Armour and Joseph A. McCahery, supra note 113,564 note supra McCahery, A. Joseph Armour and John 5(5) Ibid. Art. Ibid. 5(4) Ibid. Art. 120 Mandatory
The EU takeover directive dedicates a significant part to the protection of the minority EU theThe thesignificanttakeover directive dedicates of to protection part a The supervising authority of a MS in accordance with criteria declared in advancewith can criteriain declared accordance aThe MS of authority supervising purchases him/her with concert notsois thatitlessthanforhighestsecurities price paid the the so acquired. in acting person th higher pricea securities at any or offeror the acceptance, h mnaoybdrl i h mi biaoyrl f t of rule obligatory main the is rule bid mandatory The . purchase of a target company’s sharesthat: a target price by stating equitable company’s of purchase at
f atr h bd a be md pbi ad eoe h ofr lss for closes offer the before and public made been has bid the after If, bid rule bid
price.
124 d for the same securities by the offeror…” over a period of of period a over offeror…” the by securities same the for d
h ainl eidte adtr i ue codn toaccording rule, bid mandatory the behind rationale The an the offer price, the offeror shall increase his/her offer his/herincrease shall offerorthe price,offer the an
122 35 . The that provides requirements directive also
ermine the percentage of voting rights that rightsvoting of percentage theermine
he directive that requires a requires that directive he
123 125
121
The CEU eTD Collection whenthe the being public announcement bid. of bid open after transfe the regarding restrictions any that provide directive the Also, company. target the controlof anti any override basically and board management asso of article company’s intargetthe implement any“broken to changes bidder shares allowing the through,” be could n at two weeks stockholders company targetthe of meeting general a convene to right hasa bidder the MS, the enforced by then cent more 75per not threshold relevant or acquisition cent any 75per of the in takeovers corporatefor market cross efficient an of development the to barrier significant as considered is which defenses, takeover hostile of variety a eliminates it that way a such in designed is rule The ta facilitatecorporate to tool innovative another provides 3.1.3 129 128 127 126 exerciseany anti bo management incumbent as well as block, shares controlling itsfor payment shall by Member be set States.” bidder]. [a by suffered
Ibid. Art. 11(5) Ibid. Art. 11(3) Ibid. Art. 11 (4) Ibid, Art. 11 104, Art. note Bid, supra Takeover on Directive
The breakthroughruleThe o tre cmay euiis il o apy vis apply not will securities company target of r In addition to the obligatory bid and board neutrality rules, the takeover directive directive takeover the rules, neutrality board and bid obligatory the to addition In En bloc provisions of the breakthrough rule make it difficult for a holder of the the of holder a for difficult it make rule breakthrough the of provisions bloc En loss any for provided be shall compensation “…equitable that states (5) 11 Article Thus, anti any otice according to theotice according to one
- takeover measuresmultiplerights.voting basedtakeover on - takeover measures based on a difference in voting powers of dual class invoting class of dual powers measures on a difference based takeover The terms for determining such compensation and the arrangements the and compensation such determining for terms The
ito n te osiuinldcmns eoea incumbent an remove documents, constitutional other and ciation
EU. According to article 11 of the directive, upon the upon directive, the of 11 article to According EU. - share 36 - 129 one
- - votesystem. takeover vehicles preventing him to take take to him vehiclespreventing takeover - keover à - vis the bidder during the period period the during bidder the vis 128 127 r fatre opn, to company, target a of ard
–
the breakthrough rule. breakthrough the
- boarder boarder 126
CEU eTD Collection securities inatGermany organised (KGaA) limited by shares and partnerships (AG) stock corporations analysed. of purpose the (Börsenordnungen). for Ordinances However, Exchange Stock the and (Börsengesetz) Act Exchange Stock the (Wertpapierhandelsgesetz), Act Trading Securities the (Umwandlungsgesetz), Germany in takeoveractivities (Wertpapiererwerbs (WpÜG) Takeovers and Securities of Acquisition working start government German the made and Germany corporate around shockwaves a sent takeover hostile This Euros. billion 150 than more to amounting takeover hostile German biggest the became of takeover hostile the 3.2 132 2002). (Cologne Act Takeover and Acquisition Securities German VOIGHT with / PELTZER found be can translation Engli an 3822; p. I (2001) Gazette Federal 2001, December 20 Law of (WpÜG), Unternehmensübernahmen 131 Politics and of law Journal of Tokyo University 130 regulations as well (Bundesanstaltfür Finanzdienstleistungsaufsicht) Supervision Services Financial for Agency Federal the with registered are and market stock fo in also but Germany, in only not listed are that businesses foreign to applies also act the inGermany, listed exclusively are sharesvoting which foreignbusinesses, to applies
Baum, Harald. "Takeover Law in the EU and Germany: Comparative Analysis of a Regulat of a Analysis Comparative Germany: EU in and the Law "Takeover Harald. Baum, Ibid. Section 1(2) Section Ibid. Gesetz zur Regelung von öffentlichen Angeboten zum Erwerb von Wertpapieren und von von und Wertpapieren von Erwerb zum Angeboten öffentlichen von Regelung zurGesetz
German legal system approach to hostile takeover system hostile approachGerman to legal
Modern German takeover law was adopted in the early 2000’s after the conduction of conduction of the after in 2000’s the early lawadopted was takeover GermanModern The WpÜG provides regulations that cover the procedure of company takeover, as as takeover, company of procedure the cover that regulations provides WpÜG The listed publicly all to applies Takeovers and Securities of Acquisition the on Act The 131
market that have company’s registration office in Germany. The WpÜG is also also is WpÜG The Germany. in office registration company’s have that market
was enacted. Among other legislation acts that, to certain extent, regulate regulate extent, certain to that, acts legislation other Among enacted. was
on possible anti takeover defence measures. According to WpÜG there WpÜG to According measures. defence takeover anti possible on
ansan G y rts Vdfn pc i 1999 in plc. Vodafone British by AG Mannesmann
n h tkoe lw Tu, n aur 1 20 te c o the on Act the 2002 1, January on Thus, law. takeover the on
, there are the Stock Corporation Act, the Reorganisation Act Reorganisation the Act, Corporation Stock the thereare , hs hss ny euain poie b te pG il be will WpÜG the by provided regulations only thesis this
3 64 (2006): 37
-
BaFin
132 .
-
n Übernahmegesetz und - ory Model." Model." ory 00 which 2000, reign reign sh sh 130
CEU eTD Collection h fre h curr a led xedd3 e cn trsodo votin of threshold cent per 30 exceeded already has acquirer the former the foundwhichincan previous be section. analysis a detailed of in2014, directive EUtakeover the ofenactment the of result a asprovisions several other was Offer Mandatory The intolawE implementedGermanwith the takeover together company. target the over control the of shift a to lead offers two these only because section, present the in discussed are offers takeover and mandatory stock voting target’s of percent 30 controls or owns already who shareholder company target by company the in stake one’s increase to intend an with and stockholders; offer mandatory its from directly stock voting company target a cent per 30 then more purchasing by company target a over control a acquire to aiming bid takeover hostile a to a) offer: acquisition public offer through repurchase share company target a of possibilities three are an 134 on trading 9658#null to admitted shares liquid or 133 euro in payment cash a of “[f]orm provide controltarget the company. over the loss theirfor of in of compensation return theleave company to themwith an opportunity c target the of rights protect to offer serves provision mandatory WpÜG’s The company. target the of shares all purchase to offer public a makes first at thus and company target the over control a obtain to intends only acquirer stock, outstanding the of rest purchase to bid public a make company, target
WpÜG, supra note 13, section 33b 13, note section supra WpÜG, Germany: overview in acquisitions and mergers Public cquire control over the company; b) b) company; the over control cquire The rules on the consideration to be presented in both kinds of offers are identical offersin a are of kinds both be presented consideration to The the rules on is takeoveroffer a and mandatoryoffer a betweenmain difference The
()
(Pflichtangebot) that is a mandatory(Pflichtangebot)is target a stock that company of public purchase (Erwerbsangebot) is a public purchase of target aimshares without company of purchase is (Erwerbsangebot) a public e at otiig oto oe te opn ad hrfr i rqie to required is therefore and company the over control obtaining facto de
tkoe offer takeover a 38
ompany minority shareholders by providing providing by shareholders minority ompany , available at at , available
uropeanBreakthroughRule http://uk.practicallaw.com/3
133 Üenheneo) ta i a is that (Übernahmeangebot), . For thi For . hn n h lte cs the case latter the in when s thesis purpose only purpose thesis s soko the of stock g that in case of inof casethat - 501 134 - c) c)
and an nd a CEU eTD Collection a takeover offer. According to this section offeror must publish its decision to make an offer an make to itsdecision must publish offeror thissection toAccording takeoveroffer. a bythe WpÜG. Section 37of provided exceptions narrowlydefined of casein mandatoryoffer makinga of obligationthe compan target fourtheneedweeks a to BaFin control attainment publication within of the of of of document latter[.]”him,the of or subsidiaries with concert in acting persons offeror, the by company target the of shares of acquisitions target the of shares the of price exchange stock average “[t]he account: to in market.” organised 138 137 136 mast 135 company target a of board management the process, this After offer. an make to deci theabout writingin company target a of boardmanagement the notify shallofferor intentionthe offeror of the dec its about BaFin theinform must offeror an publication a to prior However, offer. takeover a on thatdecides company offeror’s the of body “last” the of resolution the by triggered is publication Such institutions, credit among circulation wide a with systeminformation dissemination electronic an and Internet thein unduedelay without
Ibid, Section 37 Section Ibid, 35 (1) Section Ibid, 31 (1) Section Ibid, 31 (2) 13, note section supra WpÜG, the offeror becomes aware, or ought to have become aware given the ci the given aware have become to ought or aware, becomes offerorthe time the at commence shall period The rights. voting of percentage his of extent the stating fact… that publish latest, the at days calendar seven within and unduedelay indirectl target or directly gains company Any of who a person control According(1)the to WpÜG: section of 35 Section 10 of the WpÜG provides rules publication regulating WpÜGSection provides the 10of to a mandatory submit offer the the of offeror obligesthe WpÜG sectionsame The of thathehastargetgained the company. control of .Hwvr uo rte plcto h ai cneep teofrr from offeror the exempt can BaFin the application written upon However, y.
135 ision to make a takeover offer to a target company. After publicatio After company. target a to offer takeover a make to ision
Such consideration shall be a “adequate consideration” and must takemust and consideration” “adequate a be shall consideration Such
to make a takeover offer to a target company have been issued,thetargettakeoverhave offermake been to company ato a 138
136
39
financial services institutions, enterprises etc. etc. enterprises institutions, services financial
137
of the decision to make to the decision of ymust, without company and company rcumstances, sion sion n of nof CEU eTD Collection the securities of the target company; the conditions precedent (if any) of the bid; the start and start the bid; the of (if any) the precedent target conditions the company; the of securities for offered consideration the of amount and type the bid; the of subject are which securities domi name, the offeror; the of form legal employees. the interestof representing bodies respectivetheir to document offer’sforeword tocompany ma the for and offeror target the for the mandatory is of it Also, board company. managing the to documents these submit immediately shall offeror the documents, the of publication the Upon document. the publish unduedelay any without the after offe days the prohibited 10 not has during BaFin if the document or required BaFin of submission the by document the of adoption an has offeror theIf four weeks. BaFin a of within period necessary the to send takeover to documents offer offer takeover the about body notification. representatives employees’ the inform immediately 141 140 139 offer, the on influence to board management company target a of actions several excluding WpÜG the of 33 Section the by provided rule this to exemptions certainare there However, thatc actions any take cannot target company weeks. ten then longer be circumstances any under cannot period acceptance the however, commences target the of functioning forcompany,targetetc. business the company plan future example of the regarding details supplementary some documents a the of date end
Ibid, Sectio Ibid, 11 (2) Section Ibid, 11 (1) Section Ibid, eeal, eto 1 o te pG eurs h ofrr fe notificatio after offeror the requires WpÜG the of 11 Section Generally, fe te ouet is document the After the and domicile the name, business a contain: alia, inter must, documentation The 141
n 16 (1) n
After a public announcement of a takeover offer a management board of a of board management a offer takeover a of announcement public a After cpac period. cceptance
published 139
n diin te feo sal lo rvd i the in provide also shall offeror the addition, In
h ge the ie n lgl om f h tre cmay the company; target the of form legal and cile 40 ould influence on the success of such an offer. an such of success theinfluence on ould
ea acpac pro, f or weeks, four of period, acceptance neral 140 aeet or o a target a of board nagement
, h ofrr shall offeror the r, n of the the of n CEU eTD Collection aaeet or tgte wt a uevsr bad f uh cmay permit company a followingconductmeasures: anti takeover such of board supervisory a with together board management the WpÜG, the of Section33 the of general fromexceptions is outopted companyif a Thus, association. of articles company’s into provisions corresponding providing by exemptions mentioned from above outto opt permittedstock law,GermanGerman corporations takeover gen company target a by authorised havebeen that actions 4) board; supervisory the by approved actions 3) offer;competitive a for search 2) offer; takeover a with notisconfronted which company wo which actions 1) as: such 541 Inc., 2004): Press University Oxford York: 144 143 142 squeeze general with together procedure, This offer. takeover takeover regulations British or American the from law takeover German non tacticdefence most the However, Parachutes”. “Golden the g)finally and defence Knight” “Pac c) defence, Jewel” “Crown the b) shares, own it’s of
Jeffrey N. Gordon, and Mark J. Roe, Eds. Eds. Roe, Mark J. and Gordon, N. Jeffrey 33a(2) Section Ibid, 33 Section Ibid, - 4) to decision the to prior realised partiallymake an offer; and made were that decisions of realisation 3) 2) authorisedmakegeneralmeeting by the to the an offer; after decision publication of 1) iciiain gis saeodr, rviig n emn opn law company German in prevailing shareholders, against discrimination
It is also important to say that after the EU Takeover Directive was transform into the the into transformwas DirectiveEU Takeover the that after to say important isIt also The WpÜG also provides a specific squeeze specific a provides also WpÜG The m takeover antiUsual forandthe search offers. competing the serve they that extent the to business, of course normal the outside taken actions been have actionsinnormaltakenthe of course busin board supervisory the and management of board the which to actions laws an alternative model to followlegislation.lawsmodeltoanwhile alternativetakeover reforming country’s eral meetingthattookto takeover theplaceeral offer. the shareholders of prior -
”
is not available in Germany, due to the principal of pre ofprincipal the to indue Germany, not isavailable
easures available for German companies are: a) the acquisition acquisition the a) are: companies Germanfor available easures
uld have been taken by an orderly and diligent manager of a of manager diligent and orderly an by taken been have uld Convergence and persistence in corporate governance corporate in persistence and Convergence
143 41
ess; - out procedure that follows a successful successful a follows that procedure out
- - a” eec, ) h “White the d) defence, man” out provisions of the Germa the of provisions out . 144 hs mkn German making Thus, - emptive rights and rightsemptive used American used , that differs differs that ,
(New (New e to ted 142
n
CEU eTD Collection definitely be implemented in to the takeover legislations of many post many legislationsof takeover the into implemented definitelybe veryinhardwouldjurisdictiontheiraand complex own procedure. be similarthe system ofadaptation the for However, countries some unique. takeover procedure employee company inform target to obligations board management as involving well as system board, supervisory corporate the in codetermination employees German the with together laws takeover the U.S. in recruitmentcent per 90 with incomparison is that stock, company outstandingthe ofcent least 95per ismandatory offers at or following a takeover bid 39c takeover and Section offer minority company’s target the of rights the shareholders. protects strongly offer, takeover the of sell to right shareholder wellas Act, as Corporate Stock 145 modern to according laws standards. takeover Ukrainian modify to order the in by legislator adopted Ukrainian possible be can that U.S. the and Germany in activities takeover hostile times. frominherited soviet activities M&A’s the during employees the of position convincing the to due Ukraine, as
Delaware Code Annotate title 8 Annotate Code Delaware The threshold provided in the Section 39a for squeezefor Section39a thein provided thresholdThe eetees sm sprt provi separate some Nevertheless, eeal speak Generally 145
ishigh. pretty
ing, implementation of the EU takeover directive into the German German the into directive takeover EU the of implementation ing,
aot n ntfcto o te aevr fe, ae German makes offer, takeover the of notification any about s Thus, following chapter is dedicated to the analysis of governing of to analysis the is following dedicated chapter Thus, § 253 §
(West 2013) (West sions of the German takeover regulations can can regulations takeover German the of sions
42
- out their shares after the conclusion conclusion the after shares their out - out p out rocedure upon successful uponsuccessful rocedure
- soviet countries, such countries, soviet CEU eTD Collection raid”. of raid corporatetheory, corporate a takeovers, as phenomenon such Although, system. legal country’s in undeveloped still is takeover corporate of concept since adopted, been not have U.S, the in Act Williams the Ukraine,in takeoveract entities. corporate legal comprehensive Unfortunately, of sale and purchase governing regulations other and securities corporate, country’s thereby and economy market of development with proceeded and Union Soviet became country the after 1990’s the of beginning the in development 4.1 Introduction 146 law takeover hostile the of comparison with proceeds chapter present Law, JSC the analyses of normstakeover on corporate important consisting regulation most theHowever, Act”) etc. “Securities 2006(the market of (the 1991 of Companies on Ukraine of Law the 2004, of Code Commercial the Ukraine, the of Code Civil The as laws,such infind different state can activities be M&A’s provisions of kinds these regulating Chapte
Ukrainian M&A’s deals within the joint stock companies are considered as a “corporate a as considered are companies stock joint the within deals M&A’s Ukrainian D.A. 146
eilto faeok euaig &’ atvte in activities M&A’s regulating framework Legislation Starting with analyses of rules governing Ukrainian takeover activities provided by by provided activities takeover Ukrainian governing rules of analyses with Starting definiti legal no is there Also, Gorovyi, supra note 4, 184 note supra Gorovyi,
and especially, hostile takeovers takeovers hostile especially, and r 4 which isinwhich present chapter. provided -
A comparisonof thehostile takeover law effectiveness in the
is exists in Ukrainian business environment. For example, 60 per cent cent per 60 example, For environment. business Ukrainian in existsis
“Companies Act”), The Law of Ukraine on Securities and Stock Stock and Securities on Ukraine of Law The Act”), “Companies s
isLaw)Law theJoint of Stock Ukraine JSC Companies (the on U.S., the U.S., EU andUkraine on of neither hostile takeover, nor corporate raid, raid, corporate nor takeover, hostile neither of on 43 r n h t the in or
riooy of erminology
such as German WpÜG or or WpÜG German as such the
h Uriin legal Ukrainian the kan sat its starts Ukraine needn from independent s
CEU eTD Collection hav measures. takeover hostile anti is position ithowever the takeover corporate Board years. three a in once meeting shareholders shareholder company’s of exclusive consist Companies Companies. the establishes provides forc takeover law hostile of4.2 Comparison the inpolicy changes UkraineEU and and the in U.S., effectiveness the 151 150 149 148 17 Parliament: Ukrainian of page web official at available Companies), 147 rules transparency and disclosure repur by company a over control the obtain to possibility a with company acquiring potential provide does it however takeover, oneserves who person as
Zakon Ukrainy pro Akcionerni Tovarystva from 17.09.2008, № 514 № from 17.09.2008, Tovarystva Akcionerni pro Ukrainy Zakon Ibid, Article 58 (3) Ibid, Article 58 (2) Ibid, Article 32(2) Ibid, Article 58 51, Ibid, Articles e limitations of its membership,its of limitations e e on e on chase. which , h Lw f kan o Jit tc Cmais te S Law) JSC (the Companies Stock Joint on Ukraine of Law The The JSC L JSC The April 30,2009 April two
148 The JSC Law The JSC - tier system tier
ebr can members uevsr Board Supervisory oee, nie emn two German unlike However, aw Ukrainianlaw corporate
, as it was already stated already it was as , weaker than weaker SB of a Ukrainian JSC JSC Ukrainian a of SB is the biggest achievement of is biggest of achievement the
of corporate governance in Companies governanceUkrainian Joint Stock corporate of
a provides two types of share of types two provides
Director GeneralDirector of a company.
e n lgl r aua person. natural or legal any be
Als
of such shares repurchase shares such of (SB) of o, it is interesting that MB of MB that interesting is it o, osldtn poiin o a of provisions consolidating and depending on anddepending a SB of SB a
and .
s
44 in Ukraine in h aaeet Board Management the
149 before, a -
tier board, board, tier is endowed with endowed is German AG German
basing on these analyses provides possible provides possible analyses these on basing The The
s hostile a of definitionprovide not does Ukra size company a repurchase by the acquirer the by repurchase B pons h JCs Management JSC’s the appoints SB
and other chosen jurisdictions other and http://zakon4.rada.gov.ua/la s
inian corporate law. The JSC LawThe law. JSC iniancorporate - 151 VI (The Law of Ukraine on Joint Stock Stock Joint on Ukraine Law of (The VI who SB of of SB
a : regards with
150 ) acquisition of a significant significant a of acquisition )
are
a control over a over control a
a ihn h faeok of framework the Within Ukrainian a
Ukrainian JSC JSC Ukrainian agt opn share company target
lce o te general the on elected (MB) ,
can consist only with only consist can 147 to
that of a Join a of
the approval the
ws/show/514 nee into entered on Stock Joint , as well as well as as , company, company, does t Stock Stock t
(JSC)
not
of of - s ,
CEU eTD Collection purchased i.e. through open market purchase or direct tenderoffer direct or market purchase open throughi.e. purchased not does the acquisitionof 1 proxyno significant about signal might stock company notify to obligation itintentionmakenoticehis/her public.” thewritten and to of to company present a laterthebethan obligednot of date a 30days before shares an former of Incase sharesblock of company's 156 155 154 153 152 target a of shares their acquire to shareholders (1) singleisit acting persons jointly. or person whe matter not does it therefore company, company. target o control the acquire to order in shareholder company target a to offer tender a open Thus,
(6)
Ibid. Article 64 (1) Ibid. Article Ibid, Article 1 (6)(8) Ibid, Article 40 (4) Ibid. Article 64 (1) Ibid, Article 65 (1) Ibid, Article f h JC law JSC the of
of the JSC Law isLaw JSC the of unlik conceders as conceders However, as a protectiona asHowever, An mination. itnus n lmttoso how on limitations any distinguish
acquisition of a contro a of acquisition meeting formulationin of a to participate right has a shares of block te ..o the or U.S. the e niae t th to indicates
h JC Law JSC The company target a controlover 155
possible proxy fighton proxy possible
a
acquirer biae the obligates
about potential one plus fifty 152
one’s
and b)
EU intending to obtain to intending e holder of a of holder of minorityshareholders of SB lling block of company's shares, which shares, company's of llingblock regulations os o differentiate not does neto t aqie infcn pretg o a target a of percentage significant acquire to intention odr f cnrlig lc o shares of block controlling a of holder
acquisition of a of a acquisition f tre company target a of
per cent cent per
the significant block of shares and therefore therefore and shares of block significant never the controlling share controlling the never 45 , otoln boko cmay hrssal be shall shares company of block controlling h JS the next shareholder next stock company’s outstanding of ,
opn wti 2 dy fo te ae of date the from days 20 within company according to th to according ten and more permore and ten cquisition of a significant block of shares block a significant of cquisition of controlling block law C
of a target company, the a the company, target a of iet r niet oto o the of control indirect or direct an oe o biaea curr to acquirer an obligate not dose nrae n hrhlig that shareholdings in increase s e JSC Law JSC e
meeting, since holders of a holdersof since meeting,
to company shareholders. shareholders. company to cent of cent
of comp of s block acquirer is a is acquirer block s according to according a . 156 target company company target any's sharesany's t o
’ The JSC Law JSC The , s agenda and agenda s
offer leads 154 rticle rticle
Such an “[s]hall
a to the to to rticle rticle ver a ver 153 all 65 . CEU eTD Collection the decisions by the generalmeetingthethe decisions by on: voted “against” general approval of meeting in and company’sregistered for the participation redemption mandatory demand a jointstock of on demand shareholders company Neverthel threshold specified tableto notdirective does different law “fairminoritynotforthetherights, with as exa shareholder price” provide price. market their lessthan notbe may shares of acquisitionprice respond to days 120 to 30 from has shareholder ofacquisition shares. block a significant of occurring. from takeover hostile attempted an keep to 159 158 157 measurestakeover for anti proactive provides several options e.g. a controllingprevent acquisition of an that means that acquisition such tomeasures prevent take to no right have acquired shall being sharesis neutrality “board of kind
An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies strategies defensive uses bee killer A attempt. takeover off a fend a company helps that firm individual or An Ibid, 68 (1) Ibid, Article the or German German or
Article 64 (2) Article Also,the Thought, the JSC law dose not define a hostile takeover, it is however, is ithostile takeover, not define a law dose JSC Thought, the in3)the change statutory capital. amount of the 2)major executionlegaltransaction of by a a company; 1)merger, companytakeover, spin transformation or division, Eachshareholder a controlling block shareholder of a target company one’s shares upon company shares a target one’s block of shareholder a controlling “
Pac price ess, the article 68 of the JSC Law JSC the of 68 article the ess, - man per a shareper
JSC JSC maki thus does, WpÜG the MB of a of MB the ”, the “white knight” or the “killer bees” “killer the or“white knight” the ”, provide
f otoln bok hrhle percentage shareholder block controlling of Law
–
than the one paid tothan one controlling paid purchase the
the minthe rule an owner of the company’s common shares common shares company’s the owner of an intocontradistinction
”, target governing f i/e vtn sae b te opn i h/h has he/she if company the by shares voting his/her of ority shareholder ority company can not take any take not can company
bloc
g t possible it ng
k of target company shares company target k of The same Article of the JSC LawJSC the Articlesame The of that provides the mandatory redemption of shares by shares of mandatory redemption the provides 4 6
“[ that: , stating the U.S. Williams Act and the EU takeover EU the andAct WilliamsU.S. the
s t to th to ]
with the “put thewith e compan he
157 e off e to pay to the the to pay to
159 r a wl spoie ht the that provides as well as er,
that can be be that can tactics
wih infcn bok of block significant which y - direct n company’s in in right” block of shares. block of . Thus, the JSC Law does does Law JSC Thus,the -
off; However, the JSC Law JSC theHowever, uponhostile acquirer a – minority shareholder shareholder minority ecie esrs to measures reactive
shall have a right to right to have a shall
used by the SB of a of SB used the by mple, the (rights to put to (rights governs
the excess provides some some provides ownership
U.S. case
that t that .” on a on of a of 158 he ) . , CEU eTD Collection policy that can be change no course growth on impacting leads canmeetingimplementeduponthe the only decision be shareholders of lawUkrainian JSC since charter, company’s the into defence conductionmajorintroducedlegalthetransactionupon the can only be of decision of or jewel crown of sale the while meeting, shareholders the of decision the upon available law the of language crownjewel ofsale b) or fe to companytarget 162 161 160 toapproachEU’s and them conduct legalUkrainian takeover activities. harmon into WpÜG, order takeover corporatelaw.
Ibid, 70 Ibid, Article 66 (1) 147, Article note supra Law, JSC The
to the to Article 27 Article lhuh te S law JSC the Although, Such to safe course of is it with, start To sayGenerally, that isit to correct
tactic, c iia o h ilas c i h US,te Utkoe ietv r German or directive takeover EU the U.S., the in Act Williams the to similar act universal solutions of this problem, however, there are some recommendations for recommendations some are however,there thisproblem, ofsolutions universal
wonky ownership position of of position ownership wonky wide . One of the best ways to do so for so do to ways best the of One .
it is correct to say that it is legal to implement such a implementsuch legal to is it that say to correctis it
system; - ranging takeover act shall act takeover ranging that states
,
nd off a takeover attempt takeover a ndoff a joint stock company’s redemption of securities placed by it, is on is it, by placed securities of redemption company’s stock joint a
mandatory f country’s of
describe types of corporate takeovers and possible and takeovers corporate of types describe
161
considered by the by the considered ize . The JSC law provides thatlawprovides JSC The the Ukrainiant os o sy ntig bu te sg o te “p the of usage the about anything say not does pre tender offer,tender
- business unlike German regulations of of regulations German unlike emptive right provisi
Ukrainiantakeoverregulations are akeover akeover a company company a Ukrainian governmentwhileUkrainian
47 define what is a corporate takeover within takeover corporate a is what define trciees o frin investors. foreign for attractiveness , such as a) issuance of the self tender offertender self the issuanceof a) as such ,
as a possible a as eomn adoption recommend
Ukraine Ukraine regulations and sharehol issuance of the self tender offer or inor tenderoffer self theissuance of ons in ons would be to follow follow to be would option der JSC charter JSC are provide provide and as a result a as and to n
the
obtain a control over a over control obtaina of the comprehensive comprehensive the of . measure takeoveranti 162 reforming country’s reforming country’s takeover activities, activities, takeover
valid
undeveloped lega the American the source of the source of l m l optional ,
oison pill” pill” oison negative ethods to ethods hr of There a SB.
that and the the 160
ly ly a
CEU eTD Collection takeovertheAct accordingly. Williams directive and possible provide to ho upona actions boardmanagement possible ofprovisions regulations. fairprice the with together shareholders company target
.
As well as provide effective disclosure disclosure effective provide as well As
through squeeze hr rprhs o a agt company target a of repurchase share - out and put and out
- It is It in
rules following the recommendation of of recommendation the following rules
also 48
recommended to adopt adopt to recommended
r ls eadn sae repurchase share regarding ules stile takeover stile
share s
similar to similar attempt, as well as as well as attempt, iety rm its from directly the EU’s the WpÜG’s CEU eTD Collection adopted that say fairto is it inparticular, takeovershostile and takeover corporate examinationof noticeably is it governance, corporate takeoverlaws. takeover unfriendly on jurisdiction legislation takeover Ukrainian of points weak analysed its takeovers, contested possible andexamined jurisdictions chosen in regulations takeover of problems practical and theoretical addressed regulations its approach tow modelof Germen follows examplealready from U.S. the regulations both, takeover practices corporate of it developed of part I takeover. was This thesi Furthermore describe to day the of word right the is convergence that say can one’s While upiigy o id u ta Ukrainian that out find to surprisingly
Ukrainian intensely mrcn E’ ad Ukrainian and EU’s American, in prioritising an t
was also was d incomprehensive.d
n h ntsSae, h uoenUin emn n Ukraine. and Germany Union, European the States, Unites the in them main development points of both, the U.S. and the EU frameworks on frameworks EU the and U.S. the both, of points maindevelopment them s has of phenomenon examined s
dissim , akt for market after studying after interesting to interesting solutions solutions
shareholder as the mainthe anti takeover targetprotection. asshareholder of ilar main regulations
purpose M&A’s activities, activities, M&A’s
of these problems these of approaches to co to approaches determined that determined euain sgetd oiy hne i Ukrainian in changes policy suggested regulations Conclusions ,
rcdr ad osbe outcomes. possible and procedure akt fo market oenn te rcs ad usac o hostile of substance and process the governing i napplicable 49 -
tier board structure board tier hostile takeovershostile takeover
and using best practises from chosen chosen from practises best using and although aiming at aiming rporate croae oto ad identified and control corporate r country’s
o aevr euain After regulation. takeover to as led include already laws
takeovers inchosen takeovers
corporate
understand and the Germany.the and aevr as is laws takeover and and , however uses American uses however , controversial issues of issues of controversial
takeover ing these jurisdictions these phenomenon of of phenomenon h research The
s jurisdictions
Ukraine forUkraine good some takes a big big a takes still badly badly still The paper paper The
main the CEU eTD Collection law act takeover harmonizing takeover corporate of
and will practices best and satisfy Consequently, further research isresearch requir Consequently, further Inconclusion
takeover in Ukrainein
it is correct to say that say to correctisit laws that will that regulations
that will adopt best practices frothatwill practices best adopt on both sides of the Atlantictheon both sides of be st serve country’s need in developing modern corporate modern developing in need country’s serve st kan shall Ukraine in order t in order 50 ed to find the to ed
enact o sustain a strong and efficient system system efficient and strong a sustain o
mU.S.,EU and the the Germany. a comprehensive takeover act act takeover comprehensive a best best
ocean. ways of of ways
composing modern modern
CEU eTD Collection J.Fread Weston, Kwang S. Siu, S. Kwang Weston, J.Fread 2002) Stephen M. Bainbridge, ed. ( J.F. Weston, Chung, Siu, K.S. J.A. press, 2002) Stephen M. Bain 2ndRiver,Hall, New Jersey: ed. Prentice (Upper 2008) Pearson Saddle JayBarneyB. Hesterly, S. and William Marti L. Rock, Milton 2008) Markus Dollinger, Matthew& Inc., bender Co. 1999) Branson,ArthurDouglas M. R. and Pinto Press, 2010) andUSA corporationsgoverning UK in the Germany, AndreasDonald,David and Cahn C. Megamergers,Raiding(Toronto and Scandal Corporate TakeoverJeffHowTakingtoGotfrom America:Hostile the Madrick, First We DavidHumanInstitute, 1991) AlanTakeoverBannock,and Grahamand the PeacockCorporate Interest, (Aberdeen, Public Books a of Analysis Comparative Germany: and EU the in Regulatory Model." Law "Takeover Harald. Baum, Improvi HART Publisher, 2006); Portland, Enron:and (`Oxford US After the and Europe McCahery, in Regulation A.Securities Modernising Joseph and Armour John Press, 2004) Donold, C. David and Gohn Andreas 2nded Governance, Chung S. Kwang Weston, Fred J. IvanJames and Follon Srodes, WilliamJ. Carney, Foundation 1995) Press, BSGilsonRJ Black, and plans”, rights and Decision Economics shareholder of analysis “An Meyer, R. John and Strong S. John Ed.Hall,Jersey: (New Prentice 1998) Upper Saddle River,Upper New Jersey Saddle n K. Perry n K. ; ;
; ; ;
The Mergers and Acquisition Handbook Handbook Acquisition and Mergers The , Handbook of IndustrialOrganization of , Handbook bribge, bribge, The Fair Squeeze The Fair Mergers andAcqusitions University of Tokyo Journal o Tokyo of University (New Jersey: Hall, Prentice 1998); ; andEconomics Corporation Law andEconomics Corporation Law Volume 2(May 11,Issue , 1990)
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