The Divergence of U.S. & U.K Takeover Regulations Essay

The Divergence of U.S. & U.K Takeover Regulations - Essay Example In their article, The Divergence of U.S. and UK Takeover Regulation (2007), Armour and Skeel note that takeover is the persistent bid by one company (bidder) to acquire the business of another (target), or the process by which the bidder acquires the target company. When the term regulation is incorporated into this definition, takeover regulation denotes the practice of monitoring and controlling the bidder-target interaction so that the underlying takeover deal is fair to all stakeholders involved. This process is actually regulated by legal provisions both in the U.S and the UK. Having noted divergence in takeover regulation between the U.S and the U.K, it is important to highlight key differential areas. The key areas of divergence in the U.S and UK handling of takeover regulation is the subject matter of Armour and Skeel’s text. While in both countries the takeover process is regulated by law, there are critical variations across the applicable legal framework. In the U.S, for example, defensive tactics by managers are provided for by law. In contrast, the UK takeover system illegalizes the practice of defensive tactics in the event of a materialized takeover. These two countries are noticeably unique in the manner in which they handle takeover regulation. UK system of takeover regulation is primarily driven by self-regulation. On the other hand, self-regulation is little, if any, in the U.S. Furthermore, the application and subsequent use of Delaware laws in the U.S provides a mechanism for litigation as far as takeover regulation is concerned. For this reason, relevant courts and lawyer activities are high in the U.S relative to takeover bids. In the UK, courts and lawyer activities are little, if any. Arising matters, issues, and concerns regarding takeovers are dealt with by the Takeover Panel (Gaughan 88). This divergence informs the UK-based