Finance: What is the Williams Act?

The Williams Act is federal legislation enacted to make acquisitions and/or takeovers fair. Nothing to do with tennis...sorry about that, tennis fans.

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Transcript

00:24

and square you know like a tennis court before 1968 when the Williams Act 1.0 [People playing tennis]

00:29

was enacted mega glopped gargantuan strollers could launch a takeover bid

00:34

for micro Corp shakers Rattlers and Hum to make a vertically integrated

00:39

near-monopoly in baby hardware the bid could have come in on a Thursday giving [Bid appears on calendar]

00:44

shareholders 48 hours to respond with say a 20% premium over the current share

00:50

price take it by noon Monday or leave it in the deal's off the table shareholders

00:54

would then have to quickly scramble to figure out this was no is this a fair [Woman scrambling away]

00:59

deal a steal or something else done just to disrupt the market well a bunch of

01:04

companies were quote stolen unquote this way with boards having to scramble and [Robber running away from police]

01:08

often ending up with less than optimal or full value that they were supposed to

01:13

get for their shareholders who they represent so the Williams Act came along

01:17

and required there to be a whole range of filings and disclosures whenever a

01:21

public takeover was announced like the price the terms the mix of stock and

01:26

cash what the newly composed company would look like it's out its out cetera

01:30

and it also required that there be at least five days from when the initial [Five days on calendar highlighted]

01:34

takeover was announced to there being any kind of definitive agreement and

01:39

then quickly investors realized that five days wasn't long enough so less

01:43

than a decade later yeah things move slowly in a financial regulatory world [Cash falling]

01:47

the Williams Act pause button was extended to 20 days and that's where

01:52

things stand today so yeah the Williams Act ensures [Williams act stamped fairness]

01:54

fairness or at least it tries to and that fairness you know which cannot be

01:59

said for the taking no prisoners Williams sisters those two do not know

02:03

the meaning of mercy [Tennis ball hits girl on the head]