Target Corporation Research Articles

Judicial Review of Antitakeover Devices Employed in the Noncoercive Tender Offer Context: Making Sense of the Unocal Test

Under Delaware law,2 the board of directors' role in a hostile tender offer has changed dramatically in recent years. A hostile tender offer3 is a takeover mechanism by which the tender offeror seeks to acquire a controlling interest in the target corporation.4 Since a tender offer is addressed directly to individual shareholders without securing the approval of the target corporation's board,5 the directors were traditionally almost powerless against this type of takeover attempt. Under the Delaware General Corporation Law6 and the Securities Exchange Act of 1934,7 the only function of the

U.S. outlook issues: putting America's house in order.

Despite the economic growth in 1987 and 1988, there are three issues of concern: the strength of consumer spending, the risk of accelerating inflation, and the federal budget deficit. The history of recent consumer spending is reviewed, and the recommendation made that if the recent "binge" of 1987-1988 has caused the economy to overshoot its production capacity, monetary and fiscal policies should be adjusted to rein in the spending. Regarding inflation, despite projected productivity gains, the economy seems to be heading for a 4.5%-5.0% core rate of inflation, a rate that can surge to 1970s-like levels with any substantial bad news. The observation is made that no major sustained cut in financing costs will occur until U.S. fiscal policy is changed. Regarding the deficit, voters cannot seek more services without either higher taxes or higher interest rates; growth alone will not cure the federal deficit. The distinction between good and bad types of debt is made and the history and causes of the $ 2 trillion increase in federal debt between fiscal years 1980 and 1988 is reviewed. Corporate debt and the recent corporate acquisitions and leveraged buyouts are analyzed. Public policy considerations arise primarily from the need to limit the system risks imposed by the scale of the buyout mania and to insure fair treatment of current debt holders of target corporations. Greater regulation of pension investments may be necessary, and widespread use of change-of-ownership clauses in bonds would be productive.

Combating Terrorism on the Corporate Level: The Emergence of Executive Protection Specialists in Private Security

Terrorists attacks have increased dramatically over the past two decades and have targeted Americans with greater frequency. The inability of local, state and federal police agencies to protect individuals most prone to attack, kidnapping and assassination has led to the emergence of a new growth industry in the United States and abroad: The Executive Protection Specialist. This paper will focus on the variables that influence the terrorists' decision to target individuals and corporations rather than governments and the resultant emergence of Executive Protection Specialists within the private security profession. Recruitment and training for this sophisticated new field will be emphasized along with an appraisal of career opportunities that will impact the criminal justice discipline generally and the corporate security field specifically. Also included will be an analysis of the evolving professionalism in this area as the progression from bodyguard to protection specialist is accomplished.

L'expérience américaine : L'essor des OPA et LBO financés par la dette

The US experience : this rise of takeovers and LBOs OPA and LBO are raging in the United States, six months after the stock market break. The number of deals is actually steady but the size of the biggest ones is skyrocketing. These transactions enable corporations to carry out a strategy which opposes the conglomerate movement of the sixties and seventies. The aim of many corporations is to focus on the most profitable part of the business and sell off the least performing assets. Thus, a real market of industrial and service assets has been created. The economic effects of this corporate reorganization are controversial. The immediate winners are shareholders of the target corporation who often receive big premiums on their holdings. The acquisition is, to a

Law: The Decline of the People's Lawyer?

to Ivan Boesky's credo, He who owns the most when he dies, wins. In his diary, Service dissects the partner for whom he works, a lawyer of the older generation who has little stomach for the less attractive parts of the hostile-takeover business, such as rifling the rubbish-bins of target corporations in quest of dirt about their executives. Service, the New Man of the Eighties, writes this: He wants to be a leader of today's bar and at the same time reconcile his actions with a code of ethics for a desoeuvre society of nineteenthcentury aristocrats. And obviously it's not going to work. Obviously? Is today's bar really so different? Already in the 1963 Auchincloss novel Powers of Attorney we found associates going through each others' desks, reading the partners' correspondence files, backstabbing and apple-polishing, all in order to make partner. The scrambling associates of 1963 are the genteel senior partners of today. Perhaps it is in the nature of things that each generation thinks that its Younger Generation has fallen into moral decline; or perhaps Diary of a Yuppie is simply the idiosyncratic vision of Auchincloss.

The G. J. Coles Venture: A Strategy for Creating Multiple Jobs for Intellectually Disabled Workers in Large Corporations

This paper is the first of a series describing novel employment initiatives developed by Project Employment (W.A.) Inc. to increase the employment opportunities for intellectually disabled workers seeking fully paid jobs in open employment. One such initiaitve is “Repeat Business” where a major corporation is targetted (in this instance, G.J. Coles Pty Ltd.) and an initial single position developed into multiple jobs. This paper describes the Repeat Business strategy and makes specific reference to selecting suitable workers, locating suitable jobs, targetting suitable corporations, delineating on-the-job training requirements and establishing a permanent presence in the target corporation.

Pac-Man Tender Offers

The newly developed Pac-Man' strategy demonstrates once again the persistence and striking ingenuity of target companies in contested tender offers. In the Pac-Man gambit, the target or object of a tender offer makes a bid for the original offeror. By becoming the aggressor, the target may dissuade the original offeror from pursuing its bid and may even obtain control of the original offeror. However elegant this move from the standpoint of grand corporate strategy, its legal consequences are highly uncertain. This legal uncertainty may explain why the Pac-Man defense has not been used more extensively. This comment identifies the legal problems likely to attend the Pac-Man defense and ventures some suggestions for their resolution. Although it eschews much consideration of the economic or societal desirability of such transactions, this Comment also examines possible incentives that might influence the use of Pac-Man strategies. In the typical case, one party, 0, offers to buy all the shares, or at least a majority of the shares, of a target corporation, T. T's management does not welcome O's bid and, to defend against it, makes a bid for all or for a majority of O's shares. Assume that T makes its bid for O while O's bid for T is still outstanding and that the closing dates of the two offers are relatively close. Assume further that each corporation offers cash rather than its own securities for the other corporation's

Shareholder Coordination Costs, Shark Repellents, and Takeout Mergers: The Case Against Fiduciary Duties

When a bidding corporation succeeds in obtaining voting control of a target corporation through a hostile tender offer, many commentators argue that it is unfair to allow the bidder to exercise its voting power to set the price terms of a second-step takeout merger in which the bidder purchases the shares of the remaining target shareholders. This concern is inappropriate because it treats a unitary acquisition between adversaries as if it were two separate transactions–the second of which involves abuse of power by fiduciaries–and also because it assumes that shareholders of the target corporation are incapable of protecting themselves from the power of a successful bidder. Moreover, imposition of fiduciary rules may impose either prohibitive costs or absolute barriers to some takeovers, even if such transactions would be wealth producing. While there is a risk that some takeovers may exploit the “prisoner's dilemma” facing target shareholders threatened with an unattractive takeout threat, target shareholders are capable of responding to that threat with devices to coordinate their response. So-called “shark repellent” amendments that raise the proportion of votes required to approve second-step mergers or that limit the terms of such mergers can function as coordination devices to alleviate the prisoner's dilemma. Commentators' fears that such devices may unduly burden the market for corporate control appear to depend to a large extent on unfounded assumptions that all takeovers are wealth producing and that takeovers are never motivated by potential gains flowing from exploitation of the lack of coordination among target shareholders. However, empirical studies indicate that adoption of such coordination rules can benefit target shareholders and that it is unlikely that shareholders will approve voting rules so restrictive that they would preclude wealth-creating acquisitions. The usual notions of shareholder apathy are simply inapplicable to takeout mergers.

Securities Regulation. Securities Exchange Act of 1934. Damages Awarded to Unsuccessful Tender Offeror under Section 14(e) for Loss of Opportunity to Control Target Corporation. Chris-Craft Industries, Inc. v. Piper Aircraft Corp., 516 F. 2d 172 (2d Cir. 1975), Cert. Granted, 44 U. S. L. W. 3558-59 (U. S. April 5, 1976) (Nos. 75-353 to 75-355)

Securities Regulation. Securities Exchange Act of 1934. Damages Awarded to Unsuccessful Tender Offeror under Section 14(e) for Loss of Opportunity to Control Target Corporation. Chris-Craft Industries, Inc. v. Piper Aircraft Corp., 516 F. 2d 172 (2d Cir. 1975), Cert. Granted, 44 U. S. L. W. 3558-59 (U. S. April 5, 1976) (Nos. 75-353 to 75-355)

Advance Defensive Tactics against Takeover Bids

The takeover bid is an English technique for acquiring control or a key block of shares in a publicly held corporation. The technique was introduced into the U.S.A. in the mid-sixties, where it has become known as a tender offer and widely used. It may be employed either in a contested corporate takeover or in a takeover negotiated with the management of a target company. The characteristic feature of the technique is that the transaction is executed between the shareholders of the target corporation and the acquirer (bidder). The bidder, usually but not necessarily a corporation, extends an offer to the shareholders, stating the terms (usually including a premium' over market price) under which he wishes to purchase shares. The consideration may be cash, shares of the bidder, or a package of cash and securities. If the bidder manages to obtain a list of shareholders, the offer can be communicated individually to each shareholder, excepting those who hold shares through nominees. A public offer through advertisements in leading financial newspapers can be made if the bidder does not possess such a list or as an additional means of communication. A bid may be aimed at the whole of the target's stock, one class of stock, or a certain percentage of a given class. An acquirer may use the bid technique for a friendly takeover in order to gain control without buying all the shares or assets of a corporation, or to circumvent legal requirements incident to a purchase of assets or merger. But the takeover technique is of particular benefit in contested acquisitions, where, if opposed by incumbents, the insurgent has the choice of launching a proxy fight or announcing a bid.2 The takeover bid has considerable advantages over the