Hostile Tender Offers
. There is no field of corporate law in which Delaware decisions have greater dominance than the consideration of target management's fiduciary duties in light of potential or threatened hostile tender offers
Shareholder rights plans, often known as "poison pills," are a common defensive measure utilized by corporations to fend off hostile tender offers
. Under Delaware law, corporations may endow shares with special rights or privileges.
Like Mitchell and Lehn (1990), I classify firms in the sample as hostile targets when they are targets of successful or unsuccessful hostile tender offers
, unsolicited and rejected offers, and proxy contests.
Control transactions--a category that includes friendly mergers, hostile tender offers
, management buyouts, freeze-outs, and sales of control by a controlling shareholder--stand at the conceptual and practical center of corporate law and governance.
A decade ago, we were talking about incentive compensation, strategic planning, management information systems, hostile tender offers
, and multinational organizations as the "new" challenges.
Finally, the seventh and eighth columns include only successful hostile tender offers
(i.e., offers in which the target resisted but ultimately was acquired or became private).
The restructuring phenomenon has raised numerous issues involving securities regulation, including the desirability of additional regulation of both bidder and target tactics in hostile tender offers
, possible protections for bondholders in restructurings, and the adequacy of disclosure in management buyouts.
Once such an agreement had been arranged, National Starch hired an investment banking firm to evaluate the offer, provide a fairness opinion and assist in the event of any hostile tender offers
. This firm charged National Starch a fee for its services, which the company deducted as a business expense.
(15) Between the Delaware Supreme Court decisions in Revlon and Time-Warner, target boards frequently responded to hostile tender offers
by proposing a financial restructuring of the corporation, while using takeover defenses to effectively force acceptance of their proposed restructuring.
As a consequence, the legal and economic conditions in the early 1990s may appear to favor proxy contests over hostile tender offers
as a means to ensure that managers maximize firm value.
Through early support for buyout funds, hostile tender offers
and, later, shareholder resolutions and proxy battles, large investors created the "Institutional Investor Rule." The essence of that rule: For companies lagging their industry, press for changes in policy.
As with Siliconix, however, the most interesting part of Aquila is the extent to which its discussion of the target board's role in freeze-out tender offers ignores the obvious overlaps between the doctrinal framework governing the target board's role in freeze-out tender offers and that governing the target board's role in hostile tender offers
. (153) The target corporation in Aquila had a remarkably high percentage of institutional investors; ninety-four institutions held more than eighty percent of all publicly held shares, and twenty-two institutions accounted for a majority of such shares.