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Takeover regulation

The hostile takeover occurs when managers from the desired organization refuse the acquisition tender or merger request, and the original organization continues to pursue the acquisition through alternative, yet legal means. As one would assume this process occurs within a variety of structured regulations that differ between countries. Notably, in the United Kingdom defensive tactics by managers are prohibited, whereas in the United States, Delaware law gives managers a good deal of room to manoeuvre. The purpose of this investigation then is the critical assessment of the divergent regulatory patterns for defensive actions against takeovers within the United States and the United Kingdom. Additionally, the analysis proposes a means of improving on the current practice. Overview Structural Significance of Takeover Regulation In recent years one of the most comprehensive analyses of the divergent takeover regulatory patterns between the United States and the United Kingdom was presented in Armour and Skeel’s ‘The Divergence of U.S. … the United States regulations are established by the judicial branch of state government and thus lead to laws that support organizational defense manoeuvres. To a large extent the United States has precluded Wall Street from privatizing takeover’s in the same way that the City of London has because 1930s United States federal regulation pre-empted the self-regulation that occurs in the United Kingdom and hindered the ability of institutional investors to collude towards alternative approaches. United States Regulations In further understanding the intentionality behind takeover regulations it’s necessary to gain a deeper recognition of the history of the regulatory process in both the United States and the United Kingdom. Indeed, Armour and Skeel have argued that the most prominent reasons the United States regulatory process has progressed in this direction, while the United Kingdom’s has progressed in a decidedly pro-shareholder position is because of the history of investor practices. In the United States perhaps the most prominent regulation was established with the 1934 Williams Act. Later amended in 1968 this act was established by the Securities and Exchange Commission and required mandatory disclosure of information related to cash tender offers from companies seeking to acquire another company.2 The 1968 amendment functioned as a means of closing loopholes that had increasingly been exploited in the complex business environment.3 While this regulation seemingly goes against the pervading notion that the United States judicial process favors management intervention, legal interpretation of the Williams Act notes that that the law provides equal opportunity for management and the offeror to present their cases.4 One of the most notable aspects of the

Takeover regulation