antitakeover statute

Antitakeover Statute

A law at the state level prohibiting hostile takeovers in certain circumstances. Different states have different antitakeover statutes, but most involve some way of limiting a potential acquirer's ability to take a bid directly to shareholders. Critics contend that these laws can work against shareholder interest, while proponents maintain that they promote stability in publicly-traded companies. Antitakeover statutes can only apply to companies registered in states having such laws.

antitakeover statute

A state law that makes it easier for a firm based in that state to fend off a takeover hostile to the firm's management. Such a statute may actually penalize shareholders since acquisition-minded firms or individuals may be less likely to make an offer for the firm's stock.
References in periodicals archive ?
To assess the impact of an antitakeover statute (ATS), one must
78) Like the antitakeover statute at issue in CTS, the Minnesota law creates nonuniformity, but not an inconsistent burden.
For example, promoters might be attracted to California, which has no antitakeover statute and has not yet validated an important type of poison pill.
This is so because it is a well-known fact of modern American business that Delaware offers quick and inexpensive incorporation, a low corporate tax burden, and flexibility in key corporate structural issues, including staggered terms for directors, limitations on appraisal rights, and an antitakeover statute that promotes fair and efficient negotiation of mergers, to name a few.
We took the action at the request of Cascade and the Gates Foundation Trust so they can have the flexibility to acquire up to 20% of Republic's shares without triggering Delaware's antitakeover statute.
Using this rationale, both studies conclude that firms that become subject to an antitakeover statute (posited to reflect a reduction in the takeover threat) experience an increase in managerial slack, a conclusion that is consistent with the hypothesis that takeover threats keep managers on their toes.
Race-to-the-bottom theorists point to Maryland's Unsolicited Takeover Act of 1999--by far the most potent antitakeover statute that has appeared to date--as the latest and most extreme manifestation of their view.
9 percent threshold for the Delaware antitakeover statute is without merit.
This analysis is consistent with the history of Delaware's antitakeover statute.
TABLE 1: PROBABILITY OF BECOMING A HEDGE FUND TARGET AND STATE ANTITAKEOVER STATUTES This table presents the marginal effects estimates from logit regressions of the ex-ante probability of becoming a hedge fund target next year on different state antitakeover statutes and firm- level controls as of the end of this year.
Qi and Wald (2008) determine that debt holders use more debt covenants to minimize agency costs when borrowers are incorporated in states with stronger antitakeover statutes.
Capital Structure and Corporate Control: The Effect of Antitakeover Statutes on Firm Leverage.