Public M&A Flashcards
Readings (11 cards)
Schuster – European Takeover Regulation (Part I)
The EU Takeover Directive aimed to harmonize takeover regulation via principles like equal treatment and mandatory bids, but political compromise and opt-outs (e.g., board neutrality rule) have left EU regulation fragmented and unevenly enforced.
Davies, Schuster & Van de Walle – The TOD as a Protectionist Tool?
Rather than liberalizing the market, the TOD enabled protectionist practices in Member States by allowing opt-outs and reciprocity, weakening core rules like board neutrality and entrenching anti-takeover defenses.
Kershaw – Hostile Takeovers and the Non-Frustration Rule
UK’s Rule 21.1 ensures shareholders decide on takeovers, not management, promoting market openness; however, Kershaw questions whether this rigidity still serves UK interests in light of strategic and foreign takeover pressures.
EU Takeover Directive (2004/25/EC)
The Directive lays down basic takeover principles (e.g. equal treatment, board neutrality) but permits opt-outs and reciprocity, undermining harmonization and leaving significant national variation in application.
UK Takeover Code – Rule 21.1 (Non-Frustration Rule)
Rule 21.1 limits target boards from frustrating takeovers without shareholder approval, reinforcing shareholder primacy and fairness, with the Takeover Panel ensuring compliance and flexibility through guidance.
Kershaw & Schuster – The Purposive Transformation of Company Law
They argue for reforming corporate law to support purpose-driven businesses that prioritize long-term societal value, calling for legal structures to insulate corporate purpose from short-term shareholder pressure.
Schuster – European Takeover Regulation (Part II)
The TOD institutionalized divergence by making key rules optional; the UK’s Brexit may deepen this rift as it liberalizes, while many EU states maintain strong corporate defenses.
Schuster – The Mandatory Bid Rule: Efficient, After All?
Contrary to critics, the MBR enhances market efficiency by ensuring control goes to the highest-value bidder and preventing private rent-seeking by controlling shareholders.
Hansen – The MBR: Unnecessary, Unjustifiable and Inefficient
Hansen argues the MBR is flawed, economically inefficient, and based on outdated fairness assumptions, as it deters value-creating deals and overprotects minority shareholders.
Kershaw – Principles of Takeover Regulation
Kershaw details how the UK MBR triggers at 30%, applies to concert parties and chain companies, and balances rigid fairness rules with flexible exceptions (e.g. waivers and whitewash procedures).
Davies – Control Shifts via Share Acquisition Contracts
Davies outlines why takeovers need regulation: to address coordination costs, protect minority shareholders, and manage board intervention; different countries prioritize different values (shareholder primacy vs. managerial/stakeholder control).
