2018年-CEPS欧洲政策研究中心_The_Economics_of_the_Proposed_European_Takeover_Directive_106页_2mb

Summary of The Economics of the Proposed European Takeover Directive

Core Content

This report, authored by Joseph A. McCahery, Luc Renneboog, Peer Ritter, and Sascha Haller, analyzes the proposed European Takeover Directive and its economic implications. The report is structured into three main parts, each addressing different aspects of takeover regulation, corporate governance, and market efficiency in the EU and US.

Main Viewpoints and Key Information

1. Policy Objectives and Market Efficiency

• A coherent EU policy is needed to regulate takeover bids and foster an active cross-border market for corporate control.
• The goal is to improve capital market efficiency, enhance shareholder value, and reduce the cost of capital.
• Takeovers are seen as mechanisms for reallocating assets and improving firm performance through better management and investment efficiency.

2. Corporate Governance and Shareholder Protection

• Corporate governance significantly affects firm valuation and the cost of capital.
• In Europe, ownership and control structures differ across countries, with higher shareholding concentration in continental Europe compared to the UK.
• Shareholder rights protection and transparency in accounting standards influence the premiums paid in takeover bids.
• Firms with better transparency (higher accounting standards) and one-share/one-vote principles are more likely to receive higher bids.

3. Takeover Regulation in the EU

• The proposed Directive is based on two key principles: mandatory bid rule and prohibition against defensive measures initiated by the target firm's management.
• The mandatory bid rule is considered a sound mechanism to prevent minority shareholder expropriation and eliminate discriminatory two-tier bidding.
• The break-through rule is rejected due to its potential to violate shareholder decision-making and create logical inconsistencies with the mandatory bid rule.
• Board neutrality is supported as it limits the coercive power of management and allows shareholders to assess management performance.

4. Squeeze-Out and Compensation Rules

• The squeeze-out mechanism is introduced in the Directive, allowing majority shareholders to acquire control if they hold 90–95% of the capital following a full bid.
• The report argues that squeeze-out rules should be simplified and harmonized, as they currently reflect national legal traditions and may be subject to arbitrary interpretations.
• The break-through rule is criticized for potentially determining the premium rather than reflecting market value, and it is suggested that such a rule may lead to legal challenges due to inadequate compensation.

5. Level Playing Field and Cross-Border Takeovers

• The level playing field concept, based on the break-through rule and board neutrality, is considered vague and prone to conflicting interpretations.
• The report argues that the level playing field is not a suitable benchmark for takeover regulation and that the focus should be on encouraging value-creating bids and discouraging value-decreasing ones.
• The proposed Directive should not be restricted to EU bidders; instead, it should apply to all bidders to ensure fair competition.
• The report warns against harmonizing takeover rules with US standards, as this could lead to inefficiencies and conflicts between competition and securities regulators.

6. Policy Recommendations

• The level playing field idea is not a useful guide for policy-making.
• The mandatory bid rule should be retained, with member states allowed to set thresholds based on their legal traditions.
• The break-through rule should be rejected due to its negative impact on market efficiency and its potential to reverse causality in determining premiums.
• Board neutrality should be supported as it aligns with the interests of outside shareholders and reduces the risk of management coercion.
• Squeeze-out rules should be simplified and harmonized, and the use of independent expert valuations should be reconsidered.
• The report advocates for greater transparency and disclosure standards to enhance market efficiency and protect minority shareholders.

Conclusion

The proposed European Takeover Directive aims to create a more efficient and transparent market for corporate control by harmonizing takeover regulations across the EU. While the mandatory bid rule and board neutrality are supported as beneficial, the break-through rule is viewed as problematic. The report emphasizes the importance of aligning corporate governance with market efficiency and shareholder protection, and suggests that the Directive should be designed to encourage value-creating takeovers rather than impose a one-size-fits-all regulatory framework.