Many States Expected to Match Indiana Law Curbing Hostile Corporate Takeovers

Article excerpt

NEW YORK - Dozens of states likely will match an Indiana law curbing hostile corporate takeovers now that the statute has been upheld by the U.S. Supreme Court, takeover experts predicted Wednesday.

But while the ruling makes it more difficult for bidders to win contested mergers and acquisitions, the decision does not shield managers completely from unwelcome takeovers, the experts said.

The Indiana law ``is by no means a show-stopper, but it does extend the time period'' in which a takeover bid opposed by a company's management can be completed, said Joel J. Cohen, a takeover attorney for the law firm Davis Polk Wardwell in New York.

The longer time period is a liability for an uninvited suitor because it gives management more time to organize its defenses or seek a friendlier merger.

Cohen said other states would copy Indiana's law if only for competitive reasons.

``They'll be under pressure from companies incorporated in their states to get them the benefits of this decision; as a competitive matter, they're not going to want to lose companies to other states'' that have such laws, he said.

Those states likely will include Delaware, which has ``the most to lose, in a sense, since most companies are incorporated there,'' Cohen said. ``Delaware has a reputation of being responsive to concerns expressed by companies incorporated in their state.''

The Supreme Court's ruling Tuesday was seen as a major victory for states seeking a greater voice in how their incorporated companies change hands.

The decision also came amid nationwide controversy over the current takeover climate.

Congress this year is especially critical of many hostile takeovers, and is expected to pass some type of legislation to curb what many lawmakers perceive as takeover abuses that weaken corporations and the overall economy.

By a 6-3 vote, the Supreme Court upheld an Indiana law that gives shareholders the right to decide whether an investor who buys a big block of stock in a company, or even a majority interest, can vote those shares in corporate elections. …