This is an area of the law that is debated on a regular basis (all the snooty universities long-hairs have written about it). In short, state laws can at times err on the side of companies located in that state in the event of a potentially hostile takeover. Basically, these laws keep the opposing team from taking over a corporation, presumably in part to protect jobs within that state.
You can imagine RobotoCo from California, entering a small town in Ohio in a hostile takeover of their sock-making plant, firing all 1,800 employees and replacing them with The Rosie 2000. Cataclysm for the city and not a good sitch for the politicos in the state. And the issues fly directly in the face of state versus federal versus international laws...the shareholders of the sock making company MAY be from Ohio; but they're likely from all over the country. Maybe from all over the world.
So how do anti-takeover laws help the actual owners of the company? And if they're enforced in this sock company, will any new companies ever want to move into Ohio? Will existing companies begin to leave? So yeah...these laws can be good and bad.
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Finance: What is a Hostile Takeover?24 Views
Finance a la shmoop what is a hostile takeover?
alright nose plugs 4 less has been run poorly for a decade it used to be the [Man discussing company with nose plugs]
dominant nose bleed preventer in the industry but after years of you know
leakage the stock has come all the way down from a hundred bucks a share to
twenty dollars today frustrated investors who bought in at a hundred and
then 80 and then 72, 53, 45 and 33 have written
reams of complaint letters to the board who just doesn't seem to listen to what [Man angrily typing complaint on keyboard]
is an obvious fix well they have to fire the CEO and put someone in power who
will you know stop the bleeding but they won't for whatever reason the board is
remaining loyal to the CEO so now these angry shareholders and yes they are
hostile well, they get together and openly try to buy the company under a
process where they buy off as many shares as they can common shares they
team up among themselves yeah and then finally when they have a majority
ownership in the company or at least enough to sway the vote they start [Pie chart appears with hostile shareholders]
electing new board members with their common share votes
you know board members who actually listen to them remember that it's the
common shareholders who elect the board here people then the board hires the CEO
who hires well pretty much everyone else and hostile takeovers still happen these
days or at least get threatened here's one of the juicier ones and arguably one
of the worst wealth destroying deal passes in history when Microsoft tried to
go hostile and by Yahoo in 2008 and the board didn't listen and while they ended [Man with microsoft briefcase for head giving presentation]
up selling for less and so here's kind of the letter yeah you can kind of skim
So went on and on Yahoo past and while bad things [Microsoft merge failure newspaper article appears]
happened so hostile takeovers do they happen to well-run good companies who
were doing well? well generally no they're only bad for poorly run
companies and actually good for the shareholders because hostile takeovers
usually mean the share appreciates in value
and so then the common shareholders who actually own the company well at least
they eventually get paid at least something closer to a fair price so yeah
the best way to avoid a hostile takeover well as always to plug the leak before [CEO plugs in nose plugs]
it you know gets to be a problem
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