Securities regulation

Pursuant to a congressional request, GAO provided information on 32 hostile corporate takeover attempts initiated in 1985, focusing on the: (1) terms, conditions, and stated purposes of the tender offers; (2) amount of target company stock held by bidders and target company management; (3) bidding companies' financing sources and terms; (4) bidding and target companies' financial advisers and their fees; (5) bidding and target companies' actions before and after the initial tender offers; and (6) outcomes of takeover attempts.

GAO found that: (1) 12 hostile takeovers were successful; (2) 10 target companies remained independent; and (3) friendly, third-party businesses acquired 10 businesses targeted for attempted hostile takeovers. GAO also found that: (1) stated purposes for takeover attempts included acquiring equity interest, merging or combining businesses, acquiring company control, and liquidating businesses; (2) most target companies were aware of the bidding company's interest prior to the takeover attempt; (3) bidding companies' financing sources included credit agreements, capital contribution, securities borrowing or sales, and personal funds; (4) target companies' defensive actions included litigation, stock buy-back, business mergers, reorganization, assets sales, recapitalization, and shareholder buy-outs; (5) bidding companies typically, but not always, held a larger percentage of the target companies' stock than the target companies; and (6) both bidding and target companies typically had agreements with financial advisers to pay them according to the success of the venture.