The article uses a lot of big words but it is pretty much wrong.
The reason hostile takeovers are down, if they are, is that they only make sense when the company stock price is worth less than the "intrinsic" value of the company. That has not been the case in recent memory.
If the stock price of the "target" company is 4 and the real value is 10, then you can sneak around and buy or control say 60%. You are now controlling 10 for the cost of 60% of 4 or 2.4. Now you take over the board, hostile if you have to, to perfect that control. Now you liquidate or drain.
Note that there is NO requirement here to have a smarter, better group of board members.
In fact a lot of Takeovers which are not hostile, have the opposite consequence of what you author thinks.
A lot of Mergers are merely used to play hide the weenie.
Flip up, roll out, confuse and then let the new stock slowly drift to zero. This works extremely well with Big Brokerage House sponsored mutual funds, as some of you may have noticed. :)
Much as you are going to hate this answer, you must revest stockholders with their legal rights. You attorney bashers have been brainwashed to think that a good shareholder lawsuit is bad and that efforts to protect shareholder rights should be made INEFFECTIVE or Late.
You want to appoint some government committee and throw some people in jail.
This is useless verbage, look at Harvey Pitt's actions at the SEC, he wants to appoint a committee made up of accountants to "study" the problem.
Make me king, I'll show you what to do. :))
One thing I won't do is write rambling verbose psuedo intelectual clap trap articles in the Wall Street Journal for people to go all gaga about, and quote in threads.
:))
The only reason I care is that it destroys the country's ability to allocate capital properly and takes money away from intel. |
