Williams Act and takeover defences in the United States
- The strong processes imposed by the availability of takeover defences
- Takeover defences as realising the purpose of the Williams Act
This statement will be discussed : ?Without the process effects generated by the availability of takeover defense in the United States, the Williams Act would not be fit for purpose?
The United States is among the countries the most favorable to the use of takeover defenses. A takeover defense is a measure taken by a corporation's management to discourage or defeat any hostile takeover targeting the firm. Various commentators argue that the availability of takeover defenses creates beneficial processes, the bidder having to negotiate with the incumbent managers. This would allow managers to bargain for a better offer and maximize the benefits for shareholders.
The 1960's marked a dramatic increase in the number of takeovers, and cash tender offers were not regulated. Individual shareholders experienced difficulties in obtaining information about the bidder and the offer, and therefore could not evaluate properly whether the offer was worth being accepted. Many aggressive bidders qualified as ?raiders? put pressure on shareholders to get controlled of companies at unfair prices.
The Williams Act, enacted in 1968, addressed shareholder's difficulties in obtaining information from the through Section 13(d) of the Securities Exchange Act of 1934. Its purpose was to give shareholders all the necessary information in order to better evaluate tender offers. Additionally, the Williams Act tried to give managers opportunities to express their views on the offer to stockholders.