Brief Fact Summary. Indiana enacted a law that permitted independent shareholders confronted with a tender offer to vote as a group to reject the offer and stipulated that the voting rights of shares were not discussed until fifty days after beginning of the offer.
Synopsis of Rule of Law. The Williams Act fails to forestall state antitakeover legislation that positions investors equal with the takeover bidder.
Issue. Is state antitakeover legislation, which positions investors and the takeover bidder equally, deterred by the Williams Act?
Held. (Powell, J.) No.The Williams Act does not forestall state antitakeover legislation that positions investors and the takeover bidder equally. The Williams Act generated a cautious balance between the interests of offerors and target companies as decided by a majority of the Court in Edgar v. MITE Corp., 457 U.S. 624 (1982). So, state legislation that disturbed this balance was forestalled. It is also of note that the Williams Act indicated that precise time frames for tender offers are not to be changed. In MITE, an Illinois antitakeover statute allowed for the possibility of an indeterminatesuspension while the offer was underexecutive review.A stipulation of this kind is forestalled by the Williams Act. The Indiana Act, on the other hand, promotes the fundamental idea of the Williams Act by positioning investors and the takeover bidders equally. The Indiana Act does not give either party an advantage. The Indiana Act fails to enforce an unconditional fifty day suspension on tender offers. An offeror, fearingan undesirable shareholder vote, can accept shares on the provision that the shares get voting rights within a definite time frame, referred to as a conditional tender offer. Also, the Williams Act only deters unreasonable suspensions, like the indefinite suspension in the Illinois law, not any state enforced suspensions. The suspension in the entrusting of voting rights for fifty days is not unreasonable due to it falling within the sixty day longest period allowed by the Williams Act for a tender offer. Therefore, the Indiana Act is not forestalled. Reversed.
The fact that the burden of a state regulation falls on some interstate companies does not, by itself, establish a claim of discrimination against interstate commerce.View Full Point of Law
Discussion. Once this case was decided, states began to implement various procedures in order to deter hostile takeovers. A law was passed in New York preventing New York businesses from participating in specificcommercial combination transactions for five years once an individual has procured over 20% of the outstanding stock, although an exception was made if the board consented. Postponement of the bidder’s ownership of the assets of the target company was the functional consequence of this law, which would vex the bidder’s capacity to rapidly sell off the assets in a â€œbust-upâ€ deal.