Creeping Acquisitions in Europe: Enabling Companies to be Better Safe than Sorry (2025)

European Takeover Law: The Case for a Neutral Approach

SSRN Electronic Journal, 2000

This paper argues that in revising the Takeover Bid Directive, EU policymakers should adopt a neutral approach toward takeovers, i.e. enact rules that neither hamper nor promote them. The rationale behind this approach is that takeovers can be both value-creating and value-decreasing and there is no way to tell ex ante whether they are of the former or the latter kind. Unfortunately, takeover rules cannot be crafted so as to hinder all the bad takeovers while at the same time promoting the good ones. Further, contestability of control is not cost-free, because it has a negative impact on managers' and block-holders' incentives to make firm-specific investments of human capital, which in turn affects firm value. It is thus argued that individual companies should be able to decide how contestable their control should be. After showing that the current EC legal framework for takeovers overall hinders takeover activity in the EU, the paper identifies three rationales for a takeoverneutral intervention of the EC in the area of takeover regulation (pre-emption of "takeoverhostile," protectionist national regulations, opt-out rules protecting shareholders vis-à-vis managers' and dominant shareholders' opportunism in takeover contexts, and menu rules helping individual companies define their degree of control contestability) and provides examples of rules that may respond to such rationales.

A Legal and Economic Assessment of European Takeover Regulation

Takeovers are one-off events, altering control and strategy within an organisation. But the chances of becoming the target of a bid, even where remote, daily influence corporate decision-making. Takeover rules are therefore central to company law and the balance of power among managers, shareholders and stakeholders alike. This study analyses the corporate governance drivers underpinning takeover bid regulations and assesses the implementation of the EU Directive on takeover bids and compares it with the legal framework of nine other major jurisdictions, including the US. It finds that similar rules have different effects depending on company-level and country-level characteristics and considers the use of modular legislation and optional provisions to cater for them. This book is an abridged version, with additional policy suggestions, of the study prepared for the European Commission jointly by CEPS and the law firm Marccus Partners. The legal analysis in this book was conducted b...

European takeover regulation

Economic Policy, 2003

To foster corporate restructuring and capital market integration, the European Commission has repeatedly attempted to introduce Europe-wide takeover regulation, but has encountered strong resistance. We trace the sources of this resistance to differences in corporate governance arrangements across member states and outline the economic effects of takeover regulation, focusing in particular on possible provisions of particular relevance to the European debate. Regulation may stipulate that the same price be offered to all shareholders (a 'mandatory bid' rule) and/or that differentiation of voting-rights be voided when a bidder acquires a large enough portion of a firm's shares (a 'break-through' rule). The impact of these and other rules depends on the existing structure of corporate ownership and control, which is very heterogeneous in Europe. And while a break-through rule promotes takeovers, a mandatory bid rule tends to prevent them. Hence, the two rules would tend to offset each other if introduced together, and introducing a strict mandatory bid rule alone would slow down corporate restructuring. We argue that hostile takeovers are a rather blunt instrument for achieving desirable contestability of control, and their regulation is only one of many corporate governance mechanisms to be honed in order to promote corporate restructuring in Europe.

Maciej Mataczyński (ed.), The Takeover of Public Companies as a Mode of Exercising EU Treaty Freedoms

European Business Organization Law Review

Takeover Regulation: Through the Regulatory Looking Glass

SSRN Electronic Journal, 2000

It is too early to make a complete judgment on the effectiveness of Directive 2004/25/EC on Takeover Bids as a regulatory mechanism. Such a decision would involve determining whether the Directive: achieves its goals, secures high levels of compliance from Member States and market participants and is democratically accountable. However, this paper places the Directive under a regulatory microscope in order to reflect upon some of its potential strengths and failings in respect of these criteria. A central regulatory problem for European legislators involved determining the optimal balance between harmonization and diversity. In an attempt to reach agreement between Member States, a framework Directive was agreed laying down minimum standards for takeover regulation and a number of key provisions were made optional. On the one hand, it is argued that even this "light regulatory touch" may have jeopardised the existing efficient self-regulatory regime which operates in the UK, the largest European takeover market. On the other hand, by allowing Member States a significant degree of discretion in implementing the Directive, problems of interpretation and classification arise (is the Directive a company law directive or a capital markets directive?), regulatory gaps may be identified, national differences emerge and the achievement of the Directive's goal of facilitating takeovers and yielding a level playing field may be thwarted. In respect of the latter, the paper focuses on the restrictions on frustrating action and the breakthrough rule. Finally, the paper seeks to determine whether, in this context, competition ii is preferable to harmonisation. It was hoped that by setting down benchmarks the Directive might "put a floor to the race to the bottom." Unfortunately, it is argued that the picture post-implementation does not support this contention.

Is the Single European Market an Illusion? Obstacles to Reform of EU Takeover Regulation

European Law Journal, 2005

Abstract Since 1989 the European Commission has attempted to harmonise rules governing EU takeovers as a crucial step towards the integration of Europe's capital markets. The article takes its starting point in the vote in the European Parliament in July 2001, which turned down a proposal for a Takeover Directive. Members of the European Parliament overwhelmingly voted according to national rather than party lines, which is unusual. The article develops an explanation for opposition to the directive, which emphasises differences between national systems of corporate governance. The outcome is asymmetric vulnerability, which means that the likelihood of a company becoming the target of an unwanted takeover bid differs depending on the nature of national incorporation. The article shows how national differences constituted obstacles to real reform within a context of arguments about how to create a level playing field.

The Takeover Directive: Is a Little Regulation Better Than No Regulation?

European Law Journal, 2009

This article examines Directive 2004/25/EC on Takeover Bids through a regulatory lens in order to determine its effectiveness as a regulatory mechanism. A central regulatory problem for European legislators is to determine the optimal balance between harmonisation and diversity, and the directive reflects the balance which was struck. The article questions whether the resulting 'light regulatory touch' may have jeopardised the existing efficient self-regulatory regime which operates in the UK (the largest European takeover market), while simultaneously undermining the directive's goal of facilitating takeovers and yielding a level playing field.

A Comparative Analysis of Takeover Regulation in the European Community

Law and Contemporary Problems, 1992

INTRODUCTION There can no longer be any question that Europe has gained the attention of U.S. business. Many of the largest and best known U.S. companies, including such household names as Hewlett-Packard, Phillip Morris, and AT&T, are increasingly looking to Europe as their largest potential growth market in the 1990s.1 Perhaps even more significantly, the drive to expand sales and operations within Europe has been especially great among the fastest growing companies in the United States. For example, of the twenty Silicon Valley companies recently named to Fortune magazine's list of America's 100 fastest growing companies, more than half receive between one-third and one-half of their revenues from international operations. Moreover, many of these companies (and their competitors) claim that international operations, particularly revenues in Europe, represent the best opportunity for growth in the decade ahead. The drive to expand in Europe has been spurred, at least in part, by the European Community's ("EC") proposed unification by the end of 1992. U.S. companies are well aware of the "carrot and stick" contained within the unification program: a company that enters any EC country prior to 1993 obtains barrier-free access to the world's single largest market, containing more than 340 million consumers, and to one of the world's wealthiest and

Regulation of Corporate Acquisitions: A Law and Economics Analysis of European Proposals for Reform, The

Colum. Bus. L. Rev., 1995

The Core of Corporate Governance: Implications of the Takeover Directive for Corporate Governance in Europe

2010

Corporate governance as a term encompasses the governance of companies and, as such, covers a broad area. The current mainstream corporate governance debate tends primarily to address the relationship between the company and the shareholders and, more specifically, the election, dismissal and functioning of the board and top management. 1 This paper will use corporate governance in the broader sense. The governance of companies, these all-important components of our market economies, is crucial to the further development of our economies and to the achievement of our societal goals. 2 In the broader sense of corporate governance, the function of the board (and top management) is a highly significant issue, as is their relationship with the employees. Together they are the essence of the company and those parties on which the performance of the company most crucially depends. 3  Professor, dr. juris, University of Oslo, Faculty of Law, Department of Private Law. I am grateful to Blanaid Clarke for inviting me to present this paper at the Thirteenth Irish European Law Forum: 'The Takeovers Directive Five Years On-A Reflection of Takeover Regulation in Europe' in Dec. 2009, and to the participants, especially Peer Zumbansen, Joe McCahery and Blanaid Clarke, for inspiring discussions. The usual disclaimer applies. Comments are very welcome to