Anti-Takeover Provisions and Failed Acquisitions

Jeezan Riyaz
National Law Institute University, Bhopal

Volume III, Issue III, 2020

This study provides large sample evidence on the effects of anti-takeover provisions (ATPs) on the firms’, takeover probability and premium in various takeover contests. No company wants to be taken over without proper and adequate warning that too before hand. Anti takeover provisions are adopted to prevent a hostile takeover and is a serious problem that needs to be addressed. From the perspective of a financial theory, the main issue is to see whether the benefits from acquisitions are greater than the costs including the initial investment. And also whether the marginal returns on investment post acquisition is greater than the marginal cost. We also showcase various ATPs that managers choose to strengthen their firm when faced with an increased threat of takeovers, and the effectiveness of these ATPs in deterring and reducing takeover attempts. Finally, we add to the growing context on the changes in various governing policies and outcomes in states or organizations that adopt such anti takeover provisions. Therefore its important to have a legislation like IDD in the Indian jurisprudence to help companies from being taken over.


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