The following principal state laws apply to takeovers (which include both mergers and tender offers):
• General corporate law. A merger is governed by the corporate law of the state in which the target is incorporated, which also determines the nature of a director's fiduciary duties when entering into a merger agreement or resisting a hostile takeover attempt.

• Anti-takeover laws. A large number of states offer protection from corporate takeovers. The most common types of anti-takeover laws are:
o Control share acquisition statutes. 26 states deny voting rights to a bidder that acquires more than a specified percentage of a target's stock unless the target's shareholders that are unaffiliated with the bidder approve the acquisition;

o Business combination or moratorium statutes. 33 states restrict (often for a limited period of time and typically subject to certain "fair-price" exemptions) a bidder that acquires more than a specified percentage of a target's stock from engaging in a merger with the target to force out minority shareholders who did not tender their shares in a tender or exchange offer (a second-step merger);

o Fair price statutes. 28 states prevent a bidder who crosses a specified ownership threshold (usually from 10% to 20%) from engaging in a merger or other business combination with the target unless the bidder either: pays a fair price (often the highest price paid for the target's shares by the bidder during the past two years) in the second-step merger; or before crossing the threshold, obtains approval from the board and/or from a large majority, often two-thirds, of the outstanding shares (a supermajority vote).

o Constituency statutes. 28 states permit a board to consider the interests of other related groups (such as employees, customers, suppliers and communities served by the company) in addition to the interests of the shareholders, in deciding whether to approve a merger or bid;

o Endorsements of defensive action. 35 states authorise, either by statute or case law, a target's board to defend against a hostile bid, including adopting a shareholders' rights plan (a poison pill) without shareholder approval (seeQuestion 23).

The most common jurisdiction for US public companies to be incorporated in is Delaware. Delaware's business combination statute (Delaware General Corporation Law (DGCL) § 203) prohibits an acquirer of 15% or more of a company's outstanding stock from engaging, for a three-year period following the acquisition, in any business combination with the company. The prohibition does not apply if any of the following occur:
• The business combination is approved by unaffiliated owners of two-thirds of the outstanding shares.

• The target's board approves either the 15% acquisition or the proposed business combination, in each case before the shareholder acquires the 15% stake.

• On completion of the transaction resulting in the 15% acquisition, the shareholder acquires at least 85% of the target's shares outstanding at the time such transaction commenced.