Jurisprudential and Transactional Developments in Takeovers
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Description
I survey jurisprudential and transactional developments in hostile takeovers. Recent Delaware court opinions in Unitrin, Wells Fargo, and Kidsco clarify both that “just say no” is a valid takeover defense subject only to minimal judicial scrutiny, and that courts will subject takeover defenses that go beyond “just say no” to process-based as well as heightened substantive scrutiny. I show how this doctrinal stance stems from the court's view of the proper allocation· of power between directors, shareholders, and judges: directors manage the company, shareholders express their view by electing directors, and judges should interfere in this interplay of powers only if it fails to function properly. Several transactional developments-specifically, the coupling of hostile takeover bids with proxy contests and the replacement of cash-financed, financial bids by equity-financed, strategic bids-can be understood, in part, as responses to these jurisprudential developments. In this paper, I will sketch some of the jurisprudential and transactional developments regarding hostile takeovers in the 1990s. The story I will tell is a simple one. Contrary to many other corporate law commentators, I will suggest that the Delaware Supreme Court's takeover jurisprudence establishes a coherent and consistent set of fairly straightforward standards guiding when a court will interfere in the corporate decision-making process and that some of the transactional developments are responses to this jurisprudence.
Source Publication
Comparative Corporate Governance: The State of the Art and Emerging Research
Source Editors/Authors
Klaus J. Hopt, Hideki Kanda, Mark J. Roe, Eddy Wymeersch, Stefan Prigge
Publication Date
1998
Recommended Citation
Kahan, Marcel, "Jurisprudential and Transactional Developments in Takeovers" (1998). Faculty Chapters. 952.
https://gretchen.law.nyu.edu/fac-chapt/952
