A brave new world

Author: Danielle Myles | Published: 11 Jul 2011

Speed, shareholder activism and regulatory gaps are behind the upswing in hostile M&A in the US over the past year.

Delaware courts have reaffirmed that target board control still prevails in US hostile takeovers, most recently in the Airgas v Air Products decision. But target defences are being tempered with on a scale not seen before, and some predict a slight tilting of power towards bidders and shareholders.

Staggered board and a poison pill on the shelf – the hallmarks of hostile defence strategies – have been whittled away over the past ten years.

In 2001, more than half of the S&P 500 had staggered boards. Now there are just 142. Similarly, the number of companies with poison pills has dropped from 2200 to 900 over the same period.

US counsel agree these are still the best tools for a target board-defence kit, but that staggered boards, which are subject...