Required reading

1. EU: Takeover Directive, arts. 1–8 and 13–16

2. D: Securities Acquisitions and Takeovers Act (WpÜG), §§ 1–3, 10–26, 29–32, 34–39c

3. UK: CA 2006, secs. 942–943, 974–991; City Code, General Principles 1–6, Rules 9, 19, 20

4. US: Exchange Act, §§ 14(d)–(f); Rules 14d-2, 14d-3(a), 14d-5(a)–(c), 14d-6(d) (scan Regulation M-A, Items 1–10)

Regulating disclosure, timing and price of bids

Introduction

What is a “takeover”?

In Chapter 21, we discussed various techniques for acquiring a company. One of those is a purchase of the company's stock from its shareholders. Because the ownership interests of shareholders in the corporation are represented by transferable securities, a company can be acquired through transfer of these securities directly from the current owner to a new owner. Not all stock purchases are takeovers (or, in US terminology, “tender offers”). If a buyer were to approach an entrepreneur and ask whether she was interested in selling five of the 10 million shares of her wholly owned company, this offer would not be considered a “takeover bid” (or “tender offer”) in our jurisdictions. In US law, the term “tender offer” is not specifically defined, as you can see by how much time the court spends discerning the boundaries of this term in Hanson Trust, reprinted in part in this chapter. What, then, are the characteristics the court decides are determinative for a tender offer?