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.
Related or Semi-related Video
Finance: What is a Pac Man Defense?21 Views
Finance a la shmoop what is a pacman defense?
[Pacman eating] yeah well wacka wacka to you too...Hostile takeovers are rare in real life not so
rare in pac-man but when they do happen there exists a whole cadre of strategies
behind defending them at least from the company's perspective being taken over
there and pac-man defense is inarguably the best named strategy of all of
them in essence what happens when we'll say an angry competitor let's call him
blinky Inc tries to buy an angrier competitor let's call them inky inc.
well blinky would be buying shares of inky in the open marketplace filing to [Blinky and inky appear]
go past 15% ownership and eventually own enough shares to elect its own Board of
Directors and make a takeover happen well in a Pac Man defense as blinky is
snarfing up shares of inky, inky buys shares of blinky sort of turning the
tables you know like this and while you're gobbling up that competition and [Pacman gobbling competition]
don't forget to eat a bunch of cherries or a strawberry every once in a while
because you know you still need your fruits and veggies
Up Next
What is a Hostile Takeover? A hostile takeover happens when a buyer goes past the management of a company to acquire it. The company’s management...
What is the All Holders Rule? The All Holders Rule is a rule made by the Securities Exchange Commission. It’s basically the “all created equalâ...
What is a Corporate Raider? A corporate raider is a predatory investor who purchases a significant bloc of stock or debt in a public company in ord...
There are two types of "poison pills" - flip-ins, which allow shareholders to buy at a discount, and flip-overs, which allow them to buy shares aft...