How Shareholder Approval Rules Affect the Forms of Mergers

While all acquisitions require approval from target shareholders, the necessary level of shareholder support varies across jurisdictions and deal structures.  Some transactions can be approved by a simple majority of target shareholders, while others require super-majority approval.  In our paper, Shareholder Decision Rights in Acquisitions: Evidence from Tender Offers, we investigate the impact of such variation on deal outcomes, particularly on the choice between a tender offer and merger structure.

To isolate variation in approval thresholds, we use the 2013 enactment of Delaware General Corporation Law § 251(h), which reduced the shareholder support threshold to close out a two-step … Read more