This paper looks at the antitrust implications of state antitakeover statutes. After a wave of hostile takeovers in the 1980s, many state legislatures, lobbied by the managerial interests, enacted laws that made it more difficult for outsiders to take over target corporations. This, in turn, has led to inefficient entrenchment of management and adverse consequences for shareholders. This paper argues that such inefficiencies are inconsistent with the aims and purposes of antitrust laws.
The paper will discuss both the theories supporting strong managerial protection and the elimination of hostile takeovers and the theories supporting the claim that takeovers are a productive method of improving the control and management of assets.
Such legislation deprives shareholders of a substantial premium, protects inefficient management, and has negative effects on the national economy as a whole. Hence, in so far as antitakeover statutes conflict with the goals of antitrust, the latter should trump the former.
- antitakeover statute,
Available at: http://works.bepress.com/valeriya_mikhno/1/