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Law and Economics of Takeovers

Law and Economics of Takeovers An Acquirer's Perspective

Author: Athanasios Kouloridas
Publisher: Hart Publishing
ISBN: 9781841136646
Published In: June 2008
Format: Hardback , 300 pages
Jurisdiction: U.K. ? Disclaimer:
Countri(es) stated herein are used as reference only

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This book studies takeovers from the acquirer's perspective. More precisely the book focuses on the legal and regulatory treatment of the risks faced by the acquiring company shareholders in takeovers. The identified risks are categorised into two main groups: first, risks generated by managerial choices and second, regulatory or external risks. The analysis considers the legal context but also draws on the economic literature, seeking to map the area under consideration and to suggest measures to improve the present position from both law and economics perspective.

More specifically, the book examines various methods of protecting the acquiring shareholders against value-decreasing or self-interested acquisitions, such as the class transaction rules, fiduciary duties, the acquiring directors' responsibilities under the Takeover Code, the court scheme procedure, the role of institutional shareholders and reward strategies, and methods of making the acquiring directors more exposed to the discipline of the market. The effects of the choice of the medium of payment are also covered.

In addition, it covers the Code's position with regards to auction situations and seeks to identify ways of addressing the acquiring shareholders' interests in auctions, including auctions where buyout teams or white Knights are involved. Moreover it identifies situations where deviations from horizontal equality rules, which increase takeover premia, are or should be recognised. To that effect the Code's rules on mandatory bids, the determination of the price and the form of payment offered, partial offers and squeeze outs are considered.

The analysis covers both hostile and friendly situations. In relation to hostile takeovers, the legal and regulatory framework of toehold strategies is analysed (Code's requirements, Disclosure Rules and Companies Act disclosure requirements etc). Market Abuse issues in relation to stake building are also highlighted. In relation to friendly takeovers the operation of lock-up agreements and break fees (Code's requirements, fiduciary law, financial assistance and other contract law concerns), is also explored. Finally, the Panel's position on adverse changes, pre-conditions and conditions on which the offer can be subject to and the bidder's exposure to Material Adverse Change risk are assessed.

The book discusses recent developments in the area under consideration including the Takeover Code regime after the implementation of the Takeover Directive and the Companies Act 2006.

Athanasios Kouloridas is an Attorney at Law, Research and Teaching Associate of the Athens University of Economics and Business and a lawyer with Mouzoulas and Associates in Athens.

...a timely and important contribution to the scholarship in the area of corporate takeovers...the first and only comprehensive book to address acquirer's shareholders' concerns in takeover bids. The book analyses the most neglected aspect of takeovers, protection of acquirer's shareholders...Dr Kouloridas has undertaken an exhaustive and penetrating analysis of both the law and the economics of the risks faced by shareholders of the acquirer's company in takeovers. No stone has been left unturned by the author in meeting the central objective of this book. The book should undoubtedly appeal to both legal and economic readers at all levels interested in aspects of corporate takeovers. This book is a must-read and is highly recommended for those requiring in-depth analysis of the contentious issues in takeover bids including future research and trends in this area.
Jonathan Mukwiri
Journal of Business Law
Vol 3, 2009

This book is a timely study of the regulatory regime applicable to takeovers in UK capital markets from the perspective of the acquirer...This book is surely essential reading for corporate lawyers, academics and practitioners alike. It draws together economic and legal studies in this neglected area, and draws powerful, if uncomfortable, conclusions. There is a wealth of helpful tables, illustrations and graphs explaining various concepts, much comparative material from other jurisdictions and a full bibliography. Managers, regulators, policymakers and lawyers would all do well to read this noteworthy book.
John Townsend
The Modern Law Review
72.6, November 2009

The beauty of this book is twofold. First, it has a nice balance of economic and legal analysis. Secondly, it provides some valuable insights into understanding the economic dimension of the law of takeovers with jargon-free language. The analysis is informal, but rigorous; remarks and conclusions are both persuasive and supported by empirical evidence.

Overall, this book is a valuable contribution to the law and economics literature in general … it is one of the must-read new contributions to scholarship in the area of economics of company law
Qi Zhou
Legal Studies
Volume 30, No. 1