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
Marcel Kahan,
Jurisprudential and Transactional Developments in Takeovers,
Comparative Corporate Governance: The State of the Art and Emerging Research
(1998).
Available at:
https://gretchen.law.nyu.edu/fac-chapt/952
