Hostile Takeover Contests: The Rise and Fall of Lock-Up Options

Thursday, January 1st, 1987 at 12:00 am by Robert W. Rodriguez
Robert W. Rodriguez, Hostile Takeover Contests: The Rise and Fall of Lock-Up Options, 1987 Colum. Bus. L. Rev. 193

The recent increase in the number of hostile takeovers has resulted in a fundamental restructuring of the way businesses interact. While mergers in the past were essentially friendly, today they are more likely to result from hostile takeover attempts. To protect their interests, boards of directors have set up defensive techniques to deter hostile tender offerors or at least slow the bidding process sufficiently until the board receives a more favorable offer. Generally, such director actions are protected by the business judgment rule, which immunizes the actions of corporate officers from ‘second guessing’ by courts. Necessarily, hostile bidders have challenged the application of the business judgment rule during takeover contests.

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