Abstract
Using a 2013 Delaware law that reduces the approval threshold from 90% to 50% to conduct a short-form merger after a tender offer, we investigate whether variation in the required level of shareholder support affects acquisition outcomes. We find that lower authorization requirements increase the use of tender offers relative to mergers for Delaware targets. Further, Delaware targets collectively receive greater acquisition premiums and returns after the passage of the new law relative to target firms incorporated other states. We do not find evidence that managers use the lower threshold to extract private benefits. Our results suggest that supermajority shareholder approval is unnecessary for tender offers and can increase the risk of holdup by activist investors.
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