Property Rights in Assets and Resistance to Tender Offers

Abstract

The recent spate of highly publicized hostile tender offers has prompted questions about the proper reaction of target firm management to takeover bids. Traditionally, the law has not constrained management's ability to resist acquisition. To the contrary, courts recognize not just "a large reservoir of authority" in management to respond to takeover bids, but "an obligation to determine whether the offer is in the best interests of the corporation and its shareholders," and to resist if it is not. Particularly since the publication of an important article on the issue by Frank Easterbrook and Daniel Fischel, however, the wisdom of allowing managerial resistance has been challenged.