What is the position of the board of directors during a hostile takeover bid for a UK company?

Abstract

This paper examines the effectiveness of hostile bids on the target company and its shareholders and the position of the board of directors. Hostile takeovers are considered effective because it is served to increase the share price and create value for a company in the market. This dissertation also investigates the defensive tactics of the board of directors in the target company, which would frustrate the unwanted bid prior to establishing the City Code. Consequently, the City Code regime has prohibited directors from taking action without shareholder approval. This dissertation argues that the prohibition approach is better for the target company and its shareholders. The actions directors take may increase the conflicts of interest and agency cost. They may also facilitate a hostile bid to change underperforming managers, which will affect efficiency, thus showing the relationship between share price and manager performance.