Revisiting the takeover efficiency argument and the role of the board

ABSTRACT

Despite the synergistic objective of takeovers, shareholders of acquiring companies can experience loss or limited gains when acquisitions are concluded with high takeover premiums. This article argues that, since takeover premiums are determined by acquiring management boards, and losses to shareholders are unlikely to be remedied via breach of directors’ duty, it is desirable to challenge the discretionary role of managements. It suggests that managements should declare their acquisition objective, to enable shareholders to manage their expectations. If managerial objective is to obtain synergistic gains, they should be required to demonstrate the extent to which takeover premiums that are beyond certain premium threshold would yield synergistic gains, to obtain shareholder approval. Alternatively, if their immediate acquisition objective is to obtain the benefits of controlling the target company, then the need for shareholder approval can be dispensed with, as long as the premium paid matches the assets of the target company.

KEYWORDS:

• Acquisitions premium
• acquiring companies
• regulation
• synergy
• directors’ duties

Acknowledgements

Special thanks to Dr Blanca Mamutse, Centre for the Study of Law in Theory and Practice, School of Law, Liverpool John Moores University and other anonymous reviewers of the previous drafts of the article.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Eugene Fama, ‘Efficient Capital Markets: A Review of Theory and Empirical Work’ (1970) 25 The Journal of Finance 383.

2 Daniel R Fischel, ‘Efficient Capital Market Theory, the Market for Corporate Control and the Regulation of Cash Tender Offer’ (1978) 57 Texas Law Review 3, 4.

3 ‘Takeovers’ and ‘acquisitions’ are used interchangeably in this article.

4 Barbara S Petitt and Kenneth R Ferris, Valuation for Mergers and Acquisitions (2nd edn, Pearson Education 2013) 9; see also Lucian A Bebchuk, ‘Efficient and Inefficient Sales of Corporate Control’ (1994) 109 Journal of Economics 957, 962.

5 See the analysis in D.I. below.

6 Some of the studies include, Gerald P Madden, ‘Potential Corporate Takeovers and Market Efficiency: A Note’ (1981) 36 The Journal of Finance 1191; Nick von Gersdorff and Frank Bacon, ‘US Mergers and Acquisitions: A Test of Market Efficiency’ (2009) 1 Journal of Finance & Accountancy 1; Michael L Wachter, ‘Takeover Defense When Financial Markets are (Only) Relatively Efficient’ (2003) 151 University of Pennsylvania Law Review 787; Terry S Walter, ‘Australian Takeovers: Capital Market Efficiency and Shareholder Risk and Return’ (1984) 9 Australian Journal of Management 63.

7 John Armour and Brian Cheffins, ‘Stock Market Prices and the Market for Corporate Control’ (2016) University of Illinois Law Review 761; Jeffrey Fear and Christopher Kobrak, ‘Diverging Paths: Accounting for Corporate Governance in America and Germany’ (2006) 80 Business History Review 1, 24.

8 Alexander R Slusky and Richard E Caves ‘Synergy Hypothesis and the Determinants of Premia Paid in Mergers’ (1991) 39 The Journal of Industrial Economics 277.

9 Bradford Cornell, ‘Guideline Public Company Valuation and Control Premiums: An Economic Analysis’ (2013) 8 Journal of Business Valuation and Economic Loss Analysis 53.

10 ibid 67–68.

11 n 26 below.

12 For example, the objective of the UK Takeover Code 2021, as indicated in Introduction 2A is to protect the interests of shareholders of target companies. Further, the non-frustration rule embodied in B1 General Principles 3, require managements of companies not to do anything that may indicate that a bid is accepted or rejected without the input of shareholders of target companies. See the US Securities Exchange Act of 1934 s 14(d) (6) and (7) that requires equal treatment of shareholders in target companies when a takeover bid is made.

13 See analyses in D.I.

14 See C.II. and C.III.

15 Michael C Jensen, ‘The Takeover Controversy: Analysis and Evidence’ in John C Coffee, Louis Lowenstein and Susan Rose-Ackerman (eds), Knights, Raiders and Targets: The Impact of the Hostile Takeover (Oxford University Press 1988) 318; David Hirshleifer and Anjan V Thakor, ‘Corporate Control through Board Dismissals and Takeovers’ (1998) 7 Journal of Economics & Management Strategy 489, 511.

16 See the analysis in C.II. and C.III.

17 Roberta Romano, ‘A Guide to Takeovers: Theory, Evidence and Regulation’ (1992) 9 Yale Journal on Regulation 119.

18 See the long list in Shannon Pratt and Alina V Niculita, Valuing a Business: The Analysis and Appraisal of Closely Held Companies (5th edn, McGraw Hill 2008) 385.

19 Lynn Hodgkinson and Graham H Partington, ‘The Motivation for Takeovers in the UK’ (2008) 35(1) Journal of Business Finance & Accounting 102. Even though takeovers appear to discipline ‘non-performing managers’, the quest for synergy remains the driving force for takeovers. See Michael Jensen, ‘Takeovers: Folklore and Science’ in Peter J Buckley and Pervez N Ghauri (eds), International Mergers and Acquisition: A Reader (Thompson 2002) 71; Peter Dodd and Richard Ruback, ‘Tender Offers and Stockholder Returns: An Empirical Analysis’ (1977) 5 Journal of Financial Economics 351; Michael Bradley, ‘Interfirm Tender Offers and the Market for Corporate Control’ (1980) 53 Journal of Business 345; Michael Bradley, Anand Desai and Han E Kim, ‘The Rationale Behind Interfirm Tender Offers: Information or Synergy’? (1983) 11 Journal of Financial Economics 183.

20 For other motives of takeovers, see Cornell (n 9).

21 See the discussion on market power in C.I. below.

22 Richard A Brealey, Stewart C Myers and Franklin Allen, Principles of Corporate Finance (12th edn, McGraw-Hill/Irwin 2017) 814–818.

23 David Scharfstein, ‘The Disciplinary Role of Takeovers’ (1988) 55 Review of Economic Studies 185, 192.

24 Richard Roll, ‘The Hubris Hypothesis of Takeovers’ (1986) 59 The Journal of Business 197, 201–203; Elazar Berkovitch and M P Narayanan, ‘Motives for Takeovers: An Empirical Investigation’ (1993) 28 Journal of Finance and Quantitative Analysis 347, 351. See also John Dobson, Size Matters: Why managers Should Pursue Corporate Growth at the Expense of Shareholders Value’ (2004) 23 Business and Professional Ethics Journal 45.

25 ibid Berkovitch and Narayanan, 352.

26 Sara B Moeller, Frederik P Schlingemann and René M Stulz, ‘Do Shareholders of Acquiring Firms Gain From Acquisitions’? (2003) National Bureau of Economic Research Working Paper Series, 9523 <http://www.nber.org/papers/w9523> accessed 11 February 2021; Mahendra Raj and Michael Forsyth, ‘Hubris Among UK Bidders and Losses to Shareholders’ (2003) 8 International Journal of Business 1, 8–15; Berkovitch and Narayanan (n 24) 351; Robert F Bruner, ‘Does M & A Pay? A Survey of Evidence for the Decision Maker’ (2002) Journal of Applied Finance 48, 64–65; Michael Firth, ‘Corporate Takeovers, Stockholder Returns and Executive Rewards’ (1991) 12 Managerial and Decision Economics 421, 425–27.

27 Myeong-Gu Seo and N Sharon Hill, ‘Understanding the Human Side of Merger and Acquisition: An Integrative Framework’ (2005) 41 Journal of Applied Behavioral Science 422.

28 Rupert Neate and Jennifer Rankin ‘Pfizer Admits Takeover of AstraZeneca Would Lead to Cuts in UK Jobs and R&D’ (The Guardian 13 May 2014) <http://www.theguardian.com/business/2014/may/13/pfizer-astrazeneca-uk-job-cuts-mps-hostile> accessed 11 December 2020.

29 Roll (n 24) 213–214; Nejat H Seyhun, ‘Do Bidder Managers Knowingly Pay Too Much For Target Firms’? (1990) 63 Journal of Business 439, 453.

30 Ulrike Malmendier and Geoffrey Tate, ‘Who Makes Acquisitions? CEO Overconfidence and the Market’s Reaction’ (2008) 89 Journal of Financial Economics 20, 42; Kose John, Leonard N Stern, Yue Liu and Richard J Taffler, ‘It Takes Two to Tango: Overpayment and Value Destruction in M&A Deals’ (2010) <https://pdfs.semanticscholar.org/0541/d3500457a4d775901eeedd8e24ae58aad30c.pdf?_ga=2.188380840.1013409997.1523114821-357005184.1523114821> accessed 11 December 2020. In the absence of obvious projected gains to acquiring shareholders, it has been suggested that managements should be prudent when they make acquisitions. See Bruner (n 26) 64–65; Gerald Vinten, ‘Employee Relations in Mergers and Acquisitions’ (1993) 15 Employee Relations 47, 48–50.

31 The value attached to control and the desire to gain additional market power can incentivise managers to engage in costly acquisitions, hence managers are admonished to shun the habit of blindly increasing the size of their corporation. See Cyrus A Ramezani, Luc Soenen and Alan Jung, ‘Growth, Corporate Profitability and Value Creation’ (2002) 58 Financial Analysts Journal 56, 65.

32 Slusky and Caves (n 8) 290.

33 The Enterprise and Regulatory Reform Act, 2013, s. 79, entitles shareholders of quoted companies to vote on remuneration policy. Also, The UK Corporate Governance Code 2018 (5) recommends that executive remuneration should be appropriately linked to performance.

34 See generally Christopher Avery, Judith A Chevalier and Scott Schaefer, ‘Why Do Managers Undertaker Acquisitions? An Analysis of Internal and External Rewards for Acquisitiveness’ (1998) 14 Journal of Law, Economics and Organisation 24.

35 ibid, see also Francis N Botchway, ‘Mergers and Acquisitions in Resource Industry: Implications for Africa’ (2010) 26 Connecticut Journal of International Law 51, 62.

36 For a list of the most expensive acquisitions worldwide, (including spin outs and shareholders acquisition of subsidiaries) see data from The Institute of Mergers Acquisitions and Alliances. <https://imaa-institute.org/mergers-and-acquisitions-statistics/> accessed 22 January 2021.

37 Arash Massoudi and Leila Abboud ‘How Deal for Sabmiller Left Ab InBev with Lasting Hangover’ (Financial Times, 24 July 2019) <https://www.ft.com/content/bb048b10-ad66-11e9-8030-530adfa879c2> accessed 11 January 2021.

38 ibid.

39 Bernard S Black, ‘Bidder Overpayment in Takeovers’ (1989) 41 Stanford Law Review 597.

40 Donald M DePamphilis, Mergers, Acquisitions and other Restructuring Activities: An Integrated Approach to Process, Tools, Cases and Solutions (9th edn, Academic Press United Kingdom 2018), 15.

41 Bruce A Blonigen and Justin R Pierce, ‘Evidence for the Effects of Mergers on Market Power and Efficiency’ (2016) Finance and Economics Discussion Series 2016-082. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2016.082 accessed 17 March 2021.

42 CNN Money (4 February 2000) <https://money.cnn.com/2000/02/04/europe/vodafone/> accessed 11 July 2018. Edmund l Andrews and Andrew Ross Sorkin ‘Europe’s Megadeal: The Overview; $183 Billion Deal in Europe to Join Two Wireless Giants’ (New York Times, 4 February 2000) <https://www.nytimes.com/2000/02/04/business/europe-s-megadeal-overview-183-billion-deal-europe-join-2-wireless-giants.html> accessed 15 February 2021.

43 Previously intended offers included 76% premium of €253 valuation of Mannesmann. Carol J Williams, ‘As in Mannesmann Deal, Globalization Forcing Germany Inc. Out of Business’ (Los Angeles Times, 14 February 2000) <http://articles.latimes.com/2000/feb/14/business/fi-64162> accessed 11 January 2021; Terry Barwick et al., Director of Corporate Affairs ‘Intended Offer to Mannesmann Shareholders’ 29 December 1999 Press Release <https://www.vodafone.com/content/index/media/vodafone-group-releases/1999/press_release29_11.html> accessed 11 January 2021.

44 The acquisition of SABMiller Plc by AB InBev for £79 billion in 2016 is the largest acquisition in the United Kingdom, involving the world’s two largest brewers. ‘SABMiller Shareholders Back Biggest Takeover Deal in UK History’ (Sky News online report, 6 June 2017) <https://news.sky.com/story/sabmiller-shareholders-back-biggest-takeover-deal-in-uk-history-10596745> accessed 11 January 2021; Philip Blenkinsop in Brussels and Pranav Kiran in Bengaluru (Reuters, 1 August 2016) <https://uk.reuters.com/article/us-sabmiller-m-a-abi/ab-inbev-and-sabmiller-expect-megabrew-merger-to-complete-october-10-idUKKCN10C2XC> accessed 11 January 2021.

45 Matthew Davies (BBC online, 13 October 2015) <http://www.bbc.co.uk/news/business-34513520> accessed 11 January 2021.

46 Scheherazade Daneshkhu, ‘Hard Work on AB InBev Mega Deal Begins Now’ (Financial Times 9 October 2016) <https://www.ft.com/content/7fa29f5a-8ae4-11e6-8cb7-e7ada1d123b1> accessed 25 February 2021.

47 See n 37 and 38 above.

48 While Time Warner uses the mainstream media in producing films, music, TV shows and magazines, AOL delivers its media contents using the online platform.

49 Ianthe Jeanne Dugan and Ariana Eunjung Cha, ‘AOL to Acquire Time Warner for 183 Billion Merger’ (The Washington Post, 11 January 2000) <https://www.washingtonpost.com/archive/politics/2000/01/11/aol-to-acquire-time-warner-in-record-183-billion-merger/f3bf2f07-c32b-4052-b5a6-8489bb9d7013/> accessed 25 February 2021; ‘AOL Buyout of Time Warner: Merger Frenzy Sweeping Corporate America’ (World Socialist Web, 14 January 2000) <https://www.wsws.org/en/articles/2000/01/merg-j14.html> accessed 25 February 2021; Seth Sutel, ‘AOL Buys Time Warner for $162 billion’ (ABC News, 10 January 2000) <http://abcnews.go.com/Business/Decade/aol-buys-time-warner-162-billion/story?id=9279138> accessed 25 February 2021.

50 Emma Barnett and Amanda Andrews, ‘AOL Merger was ‘The Biggest Mistake in Corporate History’, Believes Time Warner Chief Jeff Bewkes’ (The Telegraph, 28 September 2010) <https://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/media/8031227/AOL-merger-was-the-biggest-mistake-in-corporate-history-believes-Time-Warner-chief-Jeff-Bewkes.html> accessed 25 February 2021.

51 James Quinn, ‘AOL Officially Splits from Time Warner After 10 years’ (The Telegraph, 9 December 2009) <https://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/6774324/AOL-officially-splits-from-Time-warner-after-10-years.html> accessed 30 April 2018; Emily Steel, ‘AOL-Time Warner Divorce Is Official’ (The Wall Street Journal, 10 December 2009) <https://www.wsj.com/articles/SB10001424052748704825504574586393655471238> accessed 11 January 2021.

52 Lina Saigol, ‘The Real Deal: The Sobering Message of RBS’s Sky-High ABN Bid’ (Financial Times, 1 October 2007) <https://ftalphaville.ft.com/2007/10/01/7720/the-real-deal-the-sobering-message-of-rbss-sky-high-abn-bid/> accessed 22 January 2021; FSA Board Report, ‘The Failure of the Royal Bank of Scotland’ (2011) 415 <https://www.fca.org.uk/publication/corporate/fsa-rbs.pdf> accessed 22 January 2021.

53 FSA Board Report, ‘The Failure of the Royal Bank of Scotland’ (2011) 407. <https://www.fca.org.uk/publication/corporate/fsa-rbs.pdf> accessed 22 January 2021; Harry Wilson, Philip Aldrick and Kamal Ahmed ‘The Royal Bank of Scotland Investigation: The Full Story of How The Biggest Bank in the World Went Burst’ (The Telegraph, 5 March 2011) <https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8363417/Royal-Bank-of-Scotland-investigation-the-full-story-of-how-the-worlds-biggest-bank-went-bust.html> accessed 28th January 2021.

54 ‘Nationalisation of ABN AMRO’ <https://www.government.nl/topics/state-owned-enterprises/nationalisation-of-financial-institutions-abn-amro-asr-and-sns-reaal/nationalisation-of-abn-amro> accessed 28 January 2021; ABN AMRO Bank Press Release ‘Completion of ABN AMRO Bank and Fortis Bank Nederland Legal Merger’ 30 June 2010 <https://www.abnamro.com/en/newsroom/press-releases/2010/completion_of_legal_merger.html> accessed 28 January 2021; Yvette Essen ‘Financial Crisis: Fortis' Dutch Assets are Nationalised’ (The Telegraph, 3 October 2008) <https://www.telegraph.co.uk/finance/financialcrisis/3131247/Financial-Crisis-Fortis-Dutch-assets-are-nationalised.html> accessed 28 January 2021.

55 Tina Wang ‘Fortis Pulled Back from the Brink’ (Forbes, 28 September 2008) <https://www.forbes.com/topstories/2008/09/28/fortis-bailout-pingan-markets-equity-cx_tw_0928markets01.html> accessed 22 January 2021; Ian Traynor Brussels ‘Fortis: Belgium Acts to Prevent Financial Group's Collapse’ (The Guardian, 29 September 2008) <https://www.theguardian.com/money/2008/sep/29/insurance.europeanbanks> accessed 22 January 2021.

56 ‘Timeline: Key Events in the Battle for ABN AMRO’ (Reuters, 20 July 2007) <https://www.reuters.com/article/us-abnamro-barclays/timeline-key-events-in-the-battle-for-abn-amro-idUSL3018365520070730> accessed 28 January 2021.

57 See generally Harry Igor Ansoff, Corporate Strategy: An Analytic Approach to Business Policy for Growth and Expansion (McGraw-Hill 1965); Lois M Shelton, ‘Strategic Business Fits and Corporate Acquisition: Empirical Evidence’ (1988) 9 Strategic Management Journal 297.

58 Shu-Ching Jean Chen, ‘Rinker Accepts Sweetened Cemex Offer’ (Forbes, 10 April 2007) <https://www.forbes.com/2007/04/10/rinker-cemex-takeover-cx_jc_0410markets2.html#4fa1bac521c9> accessed 22 January 2021.

59 Press Release ‘Cemex offers to Acquire Rinker for $12.8 Billion’ (27 October 2006).

60 Adam Thomson, ‘Cemex: Rinker Comes Home To Roost’ (Financial Times, 11 October 2011) <https://www.ft.com/content/5e9dadd4-2b24-31d5-884b-4b10fad67f17> accessed 28 January 2021; Quyen TK Nguyen and Alan M Rugman, ‘How Emerging Economy Firms Lose Money’ <https://s3-eu-west-1.amazonaws.com/assets.henley.ac.uk/legacyUploads/2-1-PoV-emerging-economies-firms-lose-money.pdf> accessed 28 January 2021.

61 George Alexandridis, Kathleen P Fuller, Lars Terhaar and Nickolaos G Travlos ‘Deal Size, Acquisition Premia and Shareholder Gains’ (2013) 20 Journal of Corporate Finance 1.

62 Petitt and Ferris (n 4) 9.

63 See the classical definition in Adolfe A Berle, ‘Control in Corporate Law’ (1958) 58 Columbia Law Review 1212, 1213.

64 Aswath Damodaran, Damodaran on Valuation: Security Analysis for Investment and Corporate Finance (2nd edn, John Wiley & Sons Inc 2006) Ch. 13; Henry G Manne, ‘Mergers and the Market for Corporate Control’ (1965) 73 The Journal of Political Economy 110; Paul Hanouna, Atulya Sarin and Alan C Shapiro, ‘Value of Corporate Control: Some International Evidence’ (30 September 2013) USC Finance & Business Econ. Working Paper No. 01-4 <https://ssrn.com/abstract=2333799> accessed 24 February 2021.

65 Bebchuk (n 4) 962; Sanford J Grossman and Oliver D Hart ‘One Share One Vote and the Market for Corporate Control’ (1988) 20 Journal of Financial Economics 175; Mike Burkart, Denis Gromb and Fausto Panunzi, ‘Agency Conflicts in Public and Negotiated Transfers of Corporate Control’ (2000) 55 The Journal of Finance 647; See generally Adolfe A Berle and Gardinar C Means, The Modern Corporation and Private Property (Macmillan 1932); Mohamed-Firas Thraya and Jens Hagendorff, ‘Controlling Shareholders and the Acquisition Premiums Paid in European Takeover Bids’ cahier de recherche n 2010-10 E2. 2010. <https://core.ac.uk/download/pdf/47760315.pdf> accessed 22 January 2021.

66 DePamphilis (n 40) 22; Nikhil P Varaiya and Kenneth R Ferris, ‘Overpaying in Corporate Takeovers: The Winner's Curse’ (1987) 43 Financial Analysts Journal 64, 64. It has also been suggested that acquirers of firms may not be risk averse as ordinary investors (who buy shares for reasons not related to acquisitions) hence bidder prices are higher than market prices. See Jeffrey N Gordon and Lewis A Kornhauser, ‘Efficient Markets, Costly Information and Securities Research’ (1985) 60 New York University Law Review 761, 825.

67 Andrew Strickland, ‘Control Premiums in Business Valuation: A Scrutton Bland Guide’ (2015) 5.

68 ibid 3.

69 Christopher Z Mercer and Travis W Harms, Business Valuation: An Integrated Theory (2nd edn, John Wiley & Sons 2008) 65, 87; note 18 above, 384.

70 Pratt and Niculita (n 18) 385.

71 Although this has the potential to undermine the mandatory bid provision, nevertheless, minority shareholders are not obliged to tender their shares by the UK City Code on Takeovers and Mergers 2021 r 9.

72 Sanford J Grossman and Oliver D Hart, ‘Takeover Bids, the Free-rider Problem, and the Theory of the Corporation’ (1980) 11 Bell Journal of Economics 42, 43; For an alternative free-rider problem model see Lucian A Bebchuk, ‘Takeover Bids below the Expected Value of Minority Shares’ (1989) 24 Journal of Financial and Quantitative Analysis 171.

73 General Corporation Law of the State of Delaware, 8 Del. C. 1953, § 253 entitles a parent company, owning at least 90% of the shares of a subsidiary to merge with that subsidiary, and to pay off the minority shareholders in cash. See also UK Companies Act, 2006, s, 979. Conversely, minority shareholders can insist that their shares should be bought by exercising the sell out right, see the Companies Act, 2006 s 983.

74 Reuters (n 56).

75 Ben Hirschler and Bill Berkrot, ‘Pfizer walks away from $118 billion AstraZeneca takeover fight’ (Reuters, 26 May 2014) <https://www.reuters.com/article/us-astrazeneca-pfizer-idUSBREA3R0H520140526> accessed 20 February 2021.

76 Lynn A Stout ‘Are Takeover Premiums Really Premiums? Market Price, Fair Value and Corporate Law’ (1990) 99 Yale Law Journal 1235, 1246; Irwin Friend, Randolph Westerfield and Michael Granito, ‘New Evidence on the Capital Asset Pricing Model’ (1978) 33 The Journal of Finance 903.

77 Michael Bradley, Anand Desai and Han E Kim, ‘Synergistic Gains from Corporate Acquisitions and their Division Between the Stockholders of Target and Acquiring Firms’ (1988) 21 Journal of Financial Economics 3.

78 Slusky and Caves (n 8) 282.

79 Larry HP Lang, Rene M Stulz and Ralph A Walkling, ‘A Test of Free Cash Flow Hypothesis: the Case of Bidder Returns’ (1991) 29 Journal of Financial Economics 315; Larry HP Lang, Ralph Walkling and Rene Stulz, ‘Managerial Performance, Tobin's Q and the Gains from Successful Tender Offers’ (1989) 24 Journal of Financial Economics 137–154; Vijay B Gondhalekar, R Raymond Sant and Stephen P Ferris, ‘The Price of Corporate Acquisition: Determinants of Cash Takeover Premia’ (2004) 11 Applied Economics Letters, 735; see also Strickland (n 67) 5.

80 A takeover may be considered as a positive net present value project, depending on whether post-acquisition returns are highly likely. See Paul M Guest, Magnus Bild and Mikael Runsten, ‘The Effect of Takeovers on the Fundamental Value of Acquirers’ (2011) 40 Accounting and Business Research 333.

81 See C. above.

82 Particularly in the UK, Companies Act 2006, ss 170 and 172 and in Delaware, see Harris v. Carter, 582 A.2d 222, 234 (Del. Ch. 1990).

83 n 53–55.

84 Barnett and Andrews (n 50).

85 Kevin Reed, ‘Vodafone's Goodwill Write Down Sends Shock Waves through City’ (Accountancy Age, 9 March 2006) <https://www.accountancyage.com/aa/analysis/1751470/vodafones-goodwill-write-sends-shock-waves-city> accessed 11 February 2021; ‘Vodafone Books $40.9 Billion Loss’ (CNN International, 30 May 2006) <http://edition.cnn.com/2006/BUSINESS/05/30/vodafone.earns/> accessed 11 February 2021.

86 Lina Saigol, ‘Vodafone Hope to Banish Ghost of Acquisition Past’ (Financial Times, 12 June 2013) <https://www.ft.com/content/7ead3928-d342-11e2-b3ff-00144feab7de> accessed 14 February 2021.

87 Pratt and Niculita (n 18) 385 for an extensive list.

88 See n 67 and 68 above.

89 Pratt and Niculita (n 18) 845.

90 Pratt and Niculita (n 18).

91 Peskin v Anderson [2001] 1 BCLC 372, [379]; A Company Re [1986] BCLC 382.

92 Companies Act 2006, s 170(1); in Delaware, Harris v Carter 582 A.2d 222, 234 (Del. Ch. 1990).

93 Earlier, Sharp v Blank [2015] EWHC 3220 Ch.

94 [2019] EWHC 3096 (Ch).

95 Steve Slater, ‘Lloyds Rescues HBOS in $22 Billion Deal’ (Reuters, 18 September 2008) <https://www.reuters.com/article/us-lloyds-hbos-idUSLI31193420080918> accessed 11 January 2021.

96 Jill Treanor and Larry Elliott, ‘Lloyds bank bailout repaid in full, says Philip Hammond’ (The Guardian, 21 April 2017) <https://www.theguardian.com/business/2017/apr/21/lloyds-bank-bailout-repaid-in-full-philip-hammond-claims> accessed 14 February 2021.

97 [2019] EWHC 3096 (Ch) [14], [15].

98 ibid [616], [769]

99 ibid [859], [885].

100 ibid [964].

101 See Francis Okanigbuan Jnr, Corporate Takeover Law and Management Discipline (Routledge 2020) 174–191.

102 See Peskin v Anderson [2001] 12 WLUK 421, [2001] BCC 874; Briess v Woolley [1954] AC 333, HL; Allen v Hyatt [1914] 30 T.L.R. 444, PC.

103 It is a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company. See Aronson v Lewis 473 A.2d 805, 812 (Del.Supr.,1984).

104 488 A.2d 858 (Del.Supr., 1985).

105 ibid 893.

106 ibid 867.

107 Florence Shu-Acquaye, ‘Smith v Van Gorkom Revisited: Lessons Learned in Light of the Sarbanes-Oxley Act of 2002’ (2004) 3 Depaul Business & Commercial Law Journal 19, 36.

108 Afra Afsharipour, ‘Reevaluating Shareholder Voting Rights in M&A Transactions’ (2017) 70 Oklahoma Law Review 127.

109 UK Listing Rules r 10.5., r 10.2 (3), R 10 (annex 1.1) (1G, 2R); The United Kingdom Listing Rules (Release 27 April 2018); Slaughter and May, ‘A Guide to Takeovers in the United Kingdom, (November 2018) 5.

110 ibid.

111 UK Listing Rules 5.6.3.

112 See Jim Hsieh and Qinghai Wang, ‘Shareholder Voting Rights in Mergers and Acquisitions’ (2008) 1–59; Kai Li, Tingting Liu and Julie Wu, ‘Vote Avoidance and Shareholder Voting in Mergers and Acquisitions’ European Corporate Governance Institute (ECGI) – Finance Working Paper No. 481/2016, revised 12 January 2018. <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2801580> accessed 15 November 2021.

113 Marco Becht, Andrea Polo and Stefano Rossi, ‘Does Mandatory Shareholder Voting Prevent Bad Acquisition’? (2016) 29 Review of Financial Studies 3035.

114 Paul Mason et al., ‘Does Shareholder Voting Matter? Evidence from the Takeover Market’ (2018) 53 Wake Forest Law Review 157; Donald C Langevoort, ‘The Behavioural Economics of Mergers and Acquisitions’ (2011) 12 Tennessee Journal of Business Law 65.

115 Manne (n 64) 113; Scharfstein (n 23); James P Walsh and Rita D Kosnik, ‘Corporate Raiders and their Disciplinary Role in the Market for Corporate Control’ (1993) 36 Academy of Management Journal 671; Kenneth J Martin and John J Mcconnell, ‘Corporate Performance, Corporate Takeovers, and Management Turnover’ (1991) 46 Journal of Finance 671; Pieter W Moerland, ‘Alternative Disciplinary Mechanisms in Different Corporate Systems’ (1995) 26 Journal of Economic Behavior & Organization 17; VA Kennedy and RJ Limmack, ‘Takeover Activity, CEO Turnover and The Market For Corporate Control’ (1996) 23 Journal of Business Finance and Accounting 267.

116 See Pratt and Niculita (n 18).

117 See n 12 on target shareholder protection in the UK; Afsharipour (n 110) 141.

118 D.I. above.