Literature Review of Proxy Fights
Operating in the realm of the global economy is a challenging task for an organization that is only starting to expand as a recent study says (Sharma, 2012). To make sure that a company functions properly, one has to execute complete control over its key transactions and operations. As a result, the latter strive for taking control over the essential operations in entrepreneurship so that the latter could evolve in a way that is preferable to the people keeping the firm’s shares.
In a way, the phenomenon of a proxy fight can be viewed as the tool for reinforcing the strengths of the organization by creating a very strong and well-coordinated team of shareholders, who are willing to strive for the benefit of the company (Harris, 2013). However, when taken to the nth degree, the battle for influence and power in entrepreneurship may affect the firm on a very basic level (Gaughan, 2015). The focus on the conflict between the stakeholders involved may trigger the problems related to the lack of supervision in the rest of the departments, including the financial one, the R&D one, etc. In the course of a proxy fight, the proxy votes of the shareholders may be used as tools for introducing the firm to a new management system. Therefore, it is crucial to make sure that no bias should occur during proxy fights (Jeschke, Isenhardt, & Hees, 2012).
Pure Proxy Fight: Definition
The phenomenon of proxy fights manifesting their characteristics in a manner as explicit and obvious as possible is typically referred to as a pure proxy fight. To be more exact, the given type of proxy fight does not imply the incorporation of a tender offer (Georgakopoulos, 2016). It should be noted, though that the tools in question cannot provide powerful management mechanisms since they require a substantial amount of money and do not prompt the collective action of the stakeholders involved. The significance of the factor above can be explained by the possibility for a single stakeholder to strive to control rents for their own needs as opposed to the interests of the company (Baums & Scott, 2003). The case of a discord between Starboard Value LP and Yahoo! can be considered an example of a pure proxy fight as the former attempts to “separate from its valuable stakes in Alibaba Group Holding Ltd.”1
Takeover Bid: Definition
The concept of a takeover bid is traditionally defined as the suggestion that a company makes to the target audience regarding buying the firm’s shares. The phenomenon above is a public offer that is aimed at seizing control over a certain company. As a rule, friendly and hostile takeover bids are identified based on whether the process of the takeover was initiated by the board and complies with its intents. The recent deal made between Sharp and Foxconn can be viewed as a graphic example of a takeover bid. Foxconn recently proposed Sharp the total of $5.9bn, which is the equivalent of £4.2bn; or €5.4bn), for its shares.2 The reasons behind the though being the proposition of Foxconn, which is the largest supplier for Apple, are quite obvious; the entrepreneurship needs to expand to gain control over the global market. The choice that the leaders of Sharp are also understandable. Having little to no external support, the entrepreneurship needed a stronger company to guide it; therefore, Foxconn’s suggestion was rather timely.
Combination of Votes and Bids
The combination of votes and bids is referred to as the means of reinforcing the takeover process.3 Incorporating the advantages of both approaches, the given tool escalates the takeover process.4 In other words, the combination of votes and bids reinforces the positions of shareholders yet also jeopardizes the stability of the entrepreneurship. Anthem’s takeover of Cigna can be considered a recent example of the combination of votes and bids being used as a proxy fight as the case in point represents a hostile takeover implying both votes and bids.5
Selected Bibliography
Arvinth, Karthick. “Sharp Accepts $5.9 bn Foxconn Takeover Bid.”International Business Times, 2016.
Baums, Theodor, and Kenneth E. Scott. “Taking Shareholder Protection Seriously? Corporate Governance in the United States and Germany.” Johann Wolfgang Goethe-Universität Frankfurt am Main. Web.
Bösch, René. Banking Regulation. London: Sweet & Maxwell, 2012.
Gaughan, Patrick A. Mergers, Acquisitions, and Corporate Restructurings. New York, NY: John Wiley & Sons, 2015.
Georgakopoulos, Nicholas L. “Corporate Defense Law for Dispersed Ownership.” Hoftra University. Web.
Harris, Sarah. “Proxy Cultures: Circumvention in Turkish Information Society.”Master’s thesis, ProQuest LLC, 2013.
Jeschke, Sabina, Ingrid Isenhardt, and Frank Hees, Automation. Communication and Cybernetics in Science and Engineering 2011/2012. New York, NY: Springer Science & Business Media, 2012.
“Proxy Fights, Poison Pills, and Pushy Suitors: What You Need to Know about Hostile Takeovers,” The Money Fool, 2016.
Sharma, Shalendra D. ” Chinese Economy in the Aftermath of the Global Financial Crisis: Challenges to Macroeconomic Rebalancing.” International Journal of China Studies 3, no. 2 (2012): 115-149.
Van Gerven, Dirk. Common Legal Framework for Takeover Bids in Europe. Boston, MA: Cambridge University Press, 2010.
Womack, Brian. “Yahoo’s New Headache: Activist Taking Steps Toward a Proxy Fight.” Bloomberg Business, 2016. Web.
Footnotes
- Brian Womack, “Yahoo’s New Headache: Activist Taking Steps Toward a Proxy Fight,” Bloomberg Business, 2016. Web.
- Karthick Arvinth, “Sharp Accepts $5.9 bn Foxconn Takeover Bid,” International Business Times, 2016. Web.
- Dirk Van Gerven, Common Legal Framework for Takeover Bids in Europe (Boston, MA: Cambridge University Press, 2010), p. 274.
- René Bösch, Banking Regulation (London: Sweet & Maxwell, 2012), 16.
- “Proxy Fights, Poison Pills, and Pushy Suitors: What You Need to Know about Hostile Takeovers,” The Money Fool, 2016.