Definition
Takeover laws is the umbrella term for state-level statutes regulating mergers and acquisitions of in-state corporations. The most important is Delaware General Corporation Law §203, but most U.S. states have analogous provisions.
Common state-law mechanisms
- Business combination statutes — bar a “business combination” between the target and an “interested stockholder” (typically 15%+) for 3 years unless conditions are met (board approval, 85% threshold, etc.)
- Control share statutes — strip voting rights from shares acquired above certain thresholds unless restored by majority of disinterested shareholders
- Fair price statutes — require shareholders in a back-end merger to receive at least a defined “fair price” relative to the front-end tender consideration
- Constituency statutes — allow boards to consider non-shareholder constituencies in evaluating offers
Why it matters
State takeover laws operate alongside (not in place of) the federal Williams Act. A bidder pursuing a hostile target must clear both the federal disclosure regime and any applicable state-law constraints.