Takeover

Takeover

Overview
In business, a takeover is the purchase of one company (the target) by another (the acquirer, or bidder). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...

 of a private company.

Before a bidder makes an offer
Tender offer
Tender offer is a corporate finance term denoting a type of takeover bid. The tender offer is a public, open offer or invitation by a prospective acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to...

 for another company, it usually first informs the company's board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...

.
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Encyclopedia
In business, a takeover is the purchase of one company (the target) by another (the acquirer, or bidder). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...

 of a private company.

Friendly takeovers


Before a bidder makes an offer
Tender offer
Tender offer is a corporate finance term denoting a type of takeover bid. The tender offer is a public, open offer or invitation by a prospective acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to...

 for another company, it usually first informs the company's board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...

. In an ideal world, if the board feels that accepting the offer serves shareholder
Shareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....

s better than rejecting it, it recommends the offer be accepted by the shareholders.

In a private company, because the shareholders and the board are usually the same people or closely connected with one another, private acquisitions are usually friendly. If the shareholders agree to sell the company, then the board is usually of the same mind or sufficiently under the orders of the equity shareholders to cooperate with the bidder. This point is not relevant to the UK concept of takeovers, which always involve the acquisition of a public company.

Hostile takeovers


A hostile takeover allows a suitor to take over a target company whose management
Management
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...

 is unwilling to agree to a merger or takeover. A takeover is considered "hostile" if the target company's board rejects the offer, but the bidder continues to pursue it, or the bidder makes the offer directly after having announced its firm intention to make an offer.

A hostile takeover can be conducted in several ways. A tender offer
Tender offer
Tender offer is a corporate finance term denoting a type of takeover bid. The tender offer is a public, open offer or invitation by a prospective acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to...

 can be made where the acquiring company makes a public offer at a fixed price above the current market price. Tender offers in the United States are regulated by the Williams Act
Williams Act
The Williams Act refers to amendments to the Securities Exchange Act of 1934 enacted in 1968 regarding tender offers. The legislation was proposed by Senator Harrison A. Williams of New Jersey....

. An acquiring company can also engage in a proxy fight
Proxy fight
A proxy fight or proxy battle is an event that may occur when a corporation's stockholders develop opposition to some aspect of the corporate governance, often focusing on directorial and management positions. Corporate activists may attempt to persuade shareholders to use their proxy votes A proxy...

, whereby it tries to persuade enough shareholders, usually a simple majority
Majority
A majority is a subset of a group consisting of more than half of its members. This can be compared to a plurality, which is a subset larger than any other subset; i.e. a plurality is not necessarily a majority as the largest subset may consist of less than half the group's population...

, to replace the management with a new one which will approve the takeover. Another method involves quietly purchasing enough stock on the open market, known as a creeping tender offer, to effect a change in management. In all of these ways, management resists the acquisition but it is carried out anyway.

The main consequence of a bid being considered hostile is practical rather than legal. If the board of the target cooperates, the bidder can conduct extensive due diligence
Due diligence
"Due diligence" is a term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations...

 into the affairs of the target company, providing the bidder with a comprehensive analysis of the target company's finances. In contrast, a hostile bidder will only have more limited, publicly-available information about the target company available, rendering the bidder vulnerable to hidden risks regarding the target company's finances. An additional problem is that takeovers often require loans provided by banks
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

 in order to service the offer, but banks are often less willing to back a hostile bidder because of the relative lack of information about the target available to them.

Reverse takeovers



A reverse takeover
Reverse takeover
A reverse takeover or reverse merger is the acquisition of a public company by a private company so that the private company can bypass the lengthy and complex process of going public...

 is a type of takeover where a private company acquires a public company. This is usually done at the instigation of the larger, private company, the purpose being for the private company to effectively float itself while avoiding some of the expense and time involved in a conventional IPO
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...

. However, under AIM
Alternative Investment Market
AIM is a sub-market of the London Stock Exchange, allowing smaller companies to float shares with a more flexible regulatory system than is applicable to the main market....

 rules, a reverse take-over is an acquisition or acquisitions in a twelve month period which for an AIM company would:
  • exceed 100% in any of the class tests; or
  • result in a fundamental change in its business, board or voting control; or
  • in the case of an investing company, depart substantially from the investing strategy stated in its admission document or, where no admission document was produced on admission, depart substantially from the investing strategy stated in its pre-admission announcement or, depart substantially from the investing strategy.


An individual or organization-sometimes known as corporate raider-can purchase a large fraction of the company's stock and in doing so get enough votes to replace the board of directors and the CEO. With a new superior management team, the stock is a much more attractive investment, which would likely result in a price rise and a profit for the corporate raider and the other shareholders.

Backflip takeovers


A backflip takeover is any sort of takeover in which the acquiring company turns itself into a subsidiary
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...

 of the purchased company. This type of takeover rarely occurs.

Funding


Often a company acquiring another pays a specified amount for it. This money can be raised in a number of ways. Although the company may have sufficient funds available in its account, remitting payment entirely from the acquiring company's cash on hand is unusual. More often, it will be borrowed
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....

 from a bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

, or raised by an issue of bonds
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...

. Acquisitions financed through debt are known as leveraged buyouts, and the debt will often be moved down onto the balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...

 of the acquired company. The acquired company then has to pay back the debt. This is a technique often used by private equity companies. The debt ratio of financing can go as high as 80% in some cases. In such a case, the acquiring company would only need to raise 20% of the purchase price.

Loan note alternatives


Cash offers for public companies often include a "loan note alternative" that allows shareholders to take a part or all of their consideration
Consideration
Consideration is the central concept in the common law of contracts and is required, in most cases, for a contract to be enforceable. Consideration is the price one pays for another's promise. It can take a number of forms: money, property, a promise, the doing of an act, or even refraining from...

 in loan notes rather than cash. This is done primarily to make the offer more attractive in terms of taxation. A conversion of shares into cash is counted as a disposal that triggers a payment of capital gains tax
Capital gains tax
A capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property...

, whereas if the shares are converted into other securities, such as loan notes, the tax is rolled over.

All share deals


A takeover, particularly a reverse takeover
Reverse takeover
A reverse takeover or reverse merger is the acquisition of a public company by a private company so that the private company can bypass the lengthy and complex process of going public...

, may be financed by an all share deal. The bidder does not pay money, but instead issues new shares in itself to the shareholders of the company being acquired. In a reverse takeover the shareholders of the company being acquired end up with a majority of the shares in, and so control of, the company making the bid. The company has managerial rights.

In the United Kingdom


Takeovers in the UK (meaning acquisitions of public companies only) are governed by the City Code on Takeovers and Mergers
City Code on Takeovers and Mergers
The City Code on Takeovers and Mergers is a binding set of rules that apply to listed companies in the United Kingdom, such as those trading on the London Stock Exchange...

, also known as the "City Code" or "Takeover Code". The rules for a takeover, can be found what is primarily known as 'The Blue Book'. The Code used to be a non-statutory set of rules that was controlled by City institutions on a theoretically voluntary basis. However, as a breach of the Code brought such reputational damage and the possibility of exclusion from City services run by those institutions, it was regarded as binding. In 2006 the Code was put onto a statutory footing as part of the UK's compliance with the European Takeover Directive (2004/25/EC).

The Code requires that all shareholders in a company should be treated equally. It regulates when and what information companies must and cannot release publicly in relation to the bid, sets timetables for certain aspects of the bid, and sets minimum bid levels following a previous purchase of shares.

In particular:
  • a shareholder must make an offer when its shareholding, including that of parties acting in concert (a "concert party
    Concert party (business)
    A concert party is a group of people acting in concert in a takeover bid. In the UK, there are rules for such bids, regulated by regulators such as the Takeover Panel....

    "), reaches 30% of the target;
  • information relating to the bid must not be released except by announcements regulated by the Code;
  • the bidder must make an announcement if rumour or speculation have affected a company's share price;
  • the level of the offer must not be less than any price paid by the bidder in the three months before the announcement of a firm intention to make an offer;
  • if shares are bought during the offer period at a price higher than the offer price, the offer must be increased to that price;


The Rules Governing the Substantial Acquisition of Shares, which used to accompany the Code and which regulated the announcement of certain levels of shareholdings, have now been abolished, though similar provisions still exist in the Companies Act 1985
Companies Act 1985
The Companies Act 1985 is an Act of the Parliament of the United Kingdom of Great Britain and Northern Ireland, enacted in 1985, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries.The Act was a consolidation of...

.

Strategies


There are a variety of reasons why an acquiring company may wish to purchase another company. Some takeovers are opportunistic - the target company may simply be very reasonably priced for one reason or another and the acquiring company may decide that in the long run, it will end up making money by purchasing the target company. The large holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...

 Berkshire Hathaway
Berkshire Hathaway
Berkshire Hathaway Inc. is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States, that oversees and manages a number of subsidiary companies. The company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years,...

 has profited well over time by purchasing many companies opportunistically in this manner.

Other takeovers are strategic in that they are thought to have secondary effects beyond the simple effect of the profitability of the target company being added to the acquiring company's profitability. For example, an acquiring company may decide to purchase a company that is profitable and has good distribution
Distribution (business)
Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...

 capabilities in new areas which the acquiring company can use for its own products as well. A target company might be attractive because it allows the acquiring company to enter a new market without having to take on the risk, time and expense of starting a new division. An acquiring company could decide to take over a competitor not only because the competitor is profitable, but in order to eliminate competition in its field and make it easier, in the long term, to raise prices. Also a takeover could fulfill the belief that the combined company can be more profitable than the two companies would be separately due to a reduction of redundant functions.

Takeovers may also benefit from principal–agent problems associated with top executive compensation.
For example, it is fairly easy for a top executive to reduce the price of his/her company's stock - due
to information asymmetry
Information asymmetry
In economics and contract theory, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This creates an imbalance of power in transactions which can sometimes cause the transactions to go awry, a kind of market failure...

. The executive can accelerate accounting of expected expenses, delay accounting of expected revenue,
engage in off balance sheet transactions to make the company's profitability appear temporarily poorer, or simply
promote and report severely conservative (e.g. pessimistic) estimates of future earnings. Such seemingly adverse earnings
news will be likely to (at least temporarily) reduce share price. (This is again due to information asymmetries since it
is more common for top executives to do everything they can to window dress their company's earnings forecasts).
There are typically very few legal risks to being 'too conservative' in one's accounting and earnings estimates.

A reduced share price makes a company an easier takeover target. When the company gets bought out (or taken private) - at a dramatically lower price - the takeover artist gains a windfall from the former top executive's actions to surreptitiously
reduce share price. This can represent tens of billions of dollars (questionably) transferred from previous shareholders to
the takeover artist. The former top executive is then rewarded with a golden handshake
Golden handshake
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement...

 for presiding over
the fire sale
Fire sale
A fire sale is the sale of goods at extremely discounted prices, typically when the seller faces bankruptcy or other impending distress. The term may originally have been based on the sale of goods at a heavy discount due to fire damage...

 that can sometimes be in the hundreds of millions of dollars for one or two years of work.
(This is nevertheless an excellent bargain for the takeover artist, who will tend to benefit from developing a reputation
of being very generous to parting top executives). This is just one example of some of the principal-agent / perverse incentive
Perverse incentive
A perverse incentive is an incentive that has an unintended and undesirable result which is contrary to the interests of the incentive makers. Perverse incentives are a type of unintended consequences.- Examples :...

 issues involved with takeovers.

Similar issues occur when a publicly held asset or non-profit organization undergoes privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...

.
Top executives often reap tremendous monetary benefits when a government owned or non-profit entity
is sold to private hands. Just as in the example above, they can facilitate this process by making the
entity appear to be in financial crisis - this reduces the sale price (to the profit of the purchaser), and
makes non-profits and governments more likely to sell. It can also contribute to a public
perception that private entities are more efficiently run, reinforcing the political will to sell off public assets.

Pros and cons of takeover


While pros and cons of a takeover differ from case to case, there are a few worth mentioning.

Pros:
  1. Increase in sales/revenues (e.g. Procter & Gamble
    Procter & Gamble
    Procter & Gamble is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods....

     takeover of Gillette)
  2. Venture into new businesses and markets
  3. Profitability of target company
  4. Increase market share
  5. Decrease competition (from the perspective of the acquiring company)
  6. Reduction of overcapacity in the industry
  7. Enlarge brand portfolio (e.g. L'Oréal's takeover of Bodyshop)
  8. Increase in economies of scale
    Economies of scale
    Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...

  9. Increased efficiency as a result of corporate synergies/redundancies (jobs with overlapping responsibilities can be eliminated, decreasing operating costs)


Cons:
  1. Goodwill, often paid in excess for the acquisition.
  2. Reduced competition and choice for consumers in oligopoly
    Oligopoly
    An oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek ὀλίγοι "few" + πόλειν "to sell". Because there are few sellers, each oligopolist is likely to be aware of the actions of the others...

     markets. (Bad for consumers, although this is good for the companies involved in the takeover)
  3. Likelihood of job cuts.
  4. Cultural integration/conflict with new management
  5. Hidden liabilities of target entity.
  6. The monetary cost to the company.
  7. Lack of motivation for employees in the company being bought up.


Takeovers also tend to substitute debt for equity. In a sense, government tax policy of allowing for deduction
of interest expenses but not of dividends, has essentially provided a substantial subsidy to takeovers.
It can punish more conservative or prudent management that don't allow their companies to leverage
Leverage (finance)
In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives. Important examples are:* A public corporation may leverage its equity by borrowing money...

 themselves
into a high risk position. High leverage will lead to high profits if circumstances go well, but can lead
to catastrophic failure if circumstances do not go favorably. This can create substantial negative externalities
for governments, employees, suppliers and other stakeholders.

Occurrence



Corporate takeovers occur frequently in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

, United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

 and Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...

. They happen only occasionally in Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...

 because larger shareholders (typically controlling families) often have special board voting privileges designed to keep them in control. They do not happen often in Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

 because of the dual board
Dual board
Dual board structure, common in Germany and also used in other European and Asian countries, is a structure of corporate governance in which shareholders elect members of a Supervisory board, which then appoints and supervises a Management board.There are two separate boards, one executive board...

 structure, nor in Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

 because companies have interlocking sets of ownerships known as keiretsu
Keiretsu
A is a set of companies with interlocking business relationships and shareholdings. It is a type of business group. The keiretsu has maintained dominance over the Japanese economy for the greater half of the twentieth century....

, nor in the People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...

 because the state
Sovereign state
A sovereign state, or simply, state, is a state with a defined territory on which it exercises internal and external sovereignty, a permanent population, a government, and the capacity to enter into relations with other sovereign states. It is also normally understood to be a state which is neither...

 majority owns most publicly-listed companies.

Tactics against hostile takeover



  • Back-end
  • Bankmail
    Bankmail
    In a bankmail engagement, the bank of a target firm refuses financing options to firms with takeover bids. This takeover tool serves multiple purposes, which include 1) thwarting merger acquisition through financial restrictions, 2) increasing the transaction costs of the competitor’s firm to find...

  • Crown Jewel Defense
    Crown Jewel Defense
    In business, when a company is threatened with takeover, the crown jewel defense is a strategy in which the target company sells off its most attractive assets to a friendly third party or spin off the valuable assets in a separate entity. Consequently, the unfriendly bidder is less attracted to...

  • Flip-in
    Flip-in
    In business, the flip-in is one of the five main types of poison pill defenses against corporate takeovers.The flip-in is a provision in the target company's corporate charter or bylaws. The provision gives current shareholders of a targeted company, other than the hostile acquirer, rights to...

  • Flip-over
  • Golden Parachute
    Golden parachute
    A golden parachute is an agreement between a company and an employee specifying that the employee will receive certain significant benefits if employment is terminated. Sometimes, certain conditions, typically a change in company ownership, must be met, but often the cause of termination is...

  • Gray Knight
    White knight (business)
    In business, a white knight, or "friendly investor," may be a corporation or a person that intends to help another firm. There are many types of white knights...

  • Greenmail
    Greenmail
    Greenmail or greenmailing is the practice of purchasing enough shares in a firm to threaten a takeover and thereby forcing the target firm to buy those shares back at a premium in order to suspend the takeover....

  • Jonestown Defense
    Jonestown Defense
    The Jonestown defense is an extreme corporation defense against hostile takeovers. In this strategy, the target firm engages in tactics that might threaten the firm’s existence to thwart an imposing acquirer’s bids...

  • Killer bees
    Killer bees (business)
    Killer bees are firms or individuals that are employed by a target company to fend off a takeover bid; these include investment bankers , accountants, attorneys, tax specialists, etc...

  • Leveraged recapitalization
    Leveraged recapitalization
    In corporate finance, a leveraged recapitalization is a change of the capital structure of a company, a substitution of equity for debt —e.g. by issuing bonds to raise money, and using that money to buy the company's stock or to pay dividends...

  • Lobster trap
    Lobster trap (finance)
    A lobster trap, in corporate finance, is an anti-takeover strategy used by target firms. In a lobster trap, the target firm issues a charter that prevents individuals with more than 10% ownership of convertible securities from transferring these securities to voting stock...

  • Lock-up provision
    Lock-up Provision
    Lock-up provision is a term used in corporate finance which refers to the option granted by a seller to a buyer to purchase a target company’s stock as a prelude to a takeover...

  • Nancy Reagan Defense
    Nancy Reagan Defense
    The Nancy Reagan defense is a tactic in corporate finance used to counter a takeover or merger bidder who has made a formal bid to shareholders to buy their shares...

  • Non-voting stock
    Non-voting Stock
    Non-voting stock is stock that provides the shareholder very little or no vote on corporate matters, such as election of the board of directors or mergers. This type of share is usually implemented for individuals who want to invest in the company’s profitability and success at the expense of...

  • Pac-Man Defense
    Pac-Man defense
    The Pac-Man defense is a defensive option to stave off a hostile takeover in which a company that is threatened with a hostile takeover "turns the tables" by attempting to acquire its would-be buyer....


  • Pension parachute
    Pension parachute
    A pension parachute is a form of poison pill that prevents the raiding firm of a hostile takeover from utilizing the pension assets to finance the acquisition...

  • People Pill
    People pill
    As a variation of the poison pill defense, the people pill is an anti-takeover defense under which the current management team of the target company threatens to quit en masse in the event of a successful hostile takeover....

  • Poison pill
  • Safe Harbor
  • Scorched-earth defense
    Scorched-earth defense
    The scorched-earth defense is a form of risk arbitrage and anti-takeover strategy.When a target firm implements this provision, it will make an effort to make itself unattractive to the hostile bidder. For example, a company may agree to liquidate or destroy all valuable assets, also called crown...

  • Shark Repellent
    Shark repellent
    A shark repellent is any method of driving sharks away from an area, object, person, or animal. Shark repellents are one category of animal repellents.-Overview:Shark repellents have been of interest to human beings for many years, for a number of reasons...

  • Staggered board of directors
    Staggered Board of Directors
    A staggered board of directors or classified board is a prominent practice in US corporate law governing the board of directors of a company, corporation, or other organization in which only a fraction of the members of the board of directors is elected each time instead of en masse...

  • Standstill agreement
    Standstill Agreement
    A standstill agreement is usually an instrument of a hostile takeover defense, in which an unfriendly bidder agrees to limit its holdings of a target firm. In many cases, the target firm is willing to purchase the potential raider’s shares at a premium price, thereby enacting a standstill or...

  • Targeted repurchase
    Targeted repurchase
    A targeted repurchase is a technique used to thwart a hostile takeover in which the target firm purchases back its own stock from an unfriendly bidder, usually at a price well above market value.- Empirical evidence:...

  • Top-ups
    Top-ups
    In business, a top-up is a variation of a company’s stock repurchase program for common shareholders. Although this buyback reduces voting interest of its shareholder, the shareholder may subsequently increase its holdings, called a top-up....

  • Treasury stock
    Treasury stock
    A treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market ....

  • Trigger
    Trigger
    -Technology:* Trigger , a mechanism that actuates the firing of firearms* Image trigger, a device used in highspeed cameras* Schmitt trigger, an electronic circuit* Trigger circuit, IBM's name for a flip-flop...

  • Voting plan
    Voting plan
    A voting plan or voting rights plan is one of five main types of poison pills that a target firm can issue against hostile takeover attempts. These plans are implemented when a company charters preferred stock with superior voting rights to common shareholders...

    s
  • White knight
    White knight (business)
    In business, a white knight, or "friendly investor," may be a corporation or a person that intends to help another firm. There are many types of white knights...

  • White squire
  • Whitemail

See also

  • Breakup fee
    Breakup fee
    A breakup fee is a penalty set in takeover agreements, to be paid if the target backs out of a deal . The breakup fee is ostensibly to compensate the original acquirer for the cost of the time and resources expended in negotiating the original agreement...

  • Control premium
    Control premium
    Control premium is an amount that a buyer is usually willing to pay over the current market price of a publicly traded company. Contrary to a widely held view, this premium is not justified by the expected synergies, such as the expected increase in cash flow resulting from cost savings and revenue...

  • Revlon Moment
  • Scrip bid
    Scrip bid
    Scrip bid is an Australian term used to describe a takeover offer where shares are offered partly or wholly in place of cash. This means that if a take over bid is accepted, shareholders in the target company will receive shares in the new merged entity...

  • Squeeze out
    Squeeze out
    Squeeze out is a term referring to the compulsory acquisition of the stakes of a small group of shareholders from a joint stock company by means of cash compensation.-Germany:...


External links