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SC to veto the deal – the most it can do is issue a recommendation to the minority against

tendering.

Therefore,

SC

veto

power

provides at least one source of differentiation between

merger doctrine and tender offer doctrine that makes Hypothesis H1 a plausible hypothesis

across all states.

Judicial standards of review present a less clear source of differentiation outside of Delaware.

To my knowledge no other state has articulated a standard of review for the first-step tender

offer, though it seems likely that other states would follow Siliconix on the theory that a tender

offer does not involve board action, and therefore does not trigger fairness review. The back-

end short-form merger is a closer call. Here, the controller is making use of the statutory

framework that might plausibly trigger fairness review under the corporate code of other states.

In Yanow v. Teal Industries,16 the Connecticut Supreme Court held that fairness review does not

apply to a back-end short-form merger, as the Delaware Supreme Court would hold in Glassman

twenty-two years later. No other state court seems to have addressed the standard of review

question for the back-end short-form merger. This absence of case law is not surprising in view

of the fact that even Delaware did not address this question until 2001.

If subsequent courts hold that short-form mergers are subject to entire fairness review, the

only source of differentiation between the tender offer mechanism and the merger mechanism is

the SC’s ability to veto the deal. If instead other states explicitly or implicitly follow Siliconix

and Glassman, the two differences in SC bargaining power that exist in Delaware are also

present in these other states. I therefore present results throughout this paper for all targets, and

for

Delaware

targets

only.

I

also

run

interactions

between

Delaware

incorporation

and

transactional

form.

Depending

on

the

relative

importance

of

SC

veto

power

and

judicial

16

178 Conn. 263, 422 A.2d 311 (1979).

9

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