Regulatory Relief: A Plan to End Hostile Takeovers

Hostile takeovers have been on the increase in the US, in contrast to other industrialized countries, where they are not allowed or are highly regulated. The US government has focused too much on horizontal mergers in antitrust legislation, neglecting the deleterious effects of hostile conglomerate...

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Bibliographic Details
Published in:Directors & boards 1984-07, Vol.8 (4), p.14
Main Author: Rodino, Peter W
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Community relations
Legislation
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Summary:Hostile takeovers have been on the increase in the US, in contrast to other industrialized countries, where they are not allowed or are highly regulated. The US government has focused too much on horizontal mergers in antitrust legislation, neglecting the deleterious effects of hostile conglomerate takeovers. With hostile conglomerate takeovers, massive power is concentrated in the hands of a few. Hostile takeovers also represent a serious drain on national resources because managers of target firms must spend excessive time fending off takeovers and because unwarranted mergers can result in the weakening or termination of long-term company-employee-community relations. A bill introduced in the US House of Representatives (H.R. 5137) would curb hostile takeovers by allowing them only when approved by a majority of a target firm's independent directors. The proposed legislation, which would initially be enacted for a 2-year trial period, would encourage: 1. firms to appoint outside directors, 2. management to perform responsibly, and 3. directors to ensure that management actions are in the firm's best interests.
ISSN:0364-9156