Hostile Takeover Defense: The Ultimate Guide to Protecting Your Company's Future

M&A Hostile Takeover Defense: What They Don't Teach You at Business School

by Sameer Jain

4.5 out of 5

Language	:	English
File size	:	2449 KB
Screen Reader	:	Supported
Print length	:	113 pages

FREE

A hostile takeover occurs when a company attempts to acquire another company without the consent of the target company's management. Hostile takeovers can be a significant threat to companies, as they can result in the loss of control, layoffs, and other negative consequences.

There are a number of different strategies that companies can use to defend against hostile takeovers. These strategies can be divided into two main categories: preventative measures and reactive measures. Preventative measures are designed to make a company less attractive to potential acquirers, while reactive measures are designed to respond to a hostile takeover attempt.

Preventative Measures

There are a number of different preventative measures that companies can take to make themselves less attractive to potential acquirers. These measures include:

* Maintaining a strong financial position. Companies with strong financial performance are less likely to be targeted for hostile takeovers. * Building a strong corporate culture. Companies with a strong corporate culture are more likely to be able to resist a hostile takeover attempt. * Adopting anti-takeover provisions in the company's bylaws. Anti-takeover provisions can make it more difficult for an acquirer to acquire a company. * Maintaining a staggered board of directors. A staggered board of directors makes it more difficult for an acquirer to gain control of a company. * Authorizing a poison pill. A poison pill is a provision that allows a company to issue new shares to its shareholders if an acquirer acquires a certain percentage of the company's shares. This can make it more expensive for an acquirer to acquire a company.

Reactive Measures

If a company is the target of a hostile takeover attempt, there are a number of reactive measures that it can take. These measures include:

* Hiring a financial advisor. A financial advisor can help a company evaluate its options and develop a defense strategy. * Contacting legal counsel. Legal counsel can help a company understand its rights and obligations under the law. * Communicating with shareholders. It is important to keep shareholders informed of the situation and to explain the company's defense strategy. * Launching a public relations campaign. A public relations campaign can help to generate support for the company's defense strategy. * Pursuing legal action. In some cases, a company may be able to pursue legal action to block a hostile takeover attempt.

Case Study

In 2018, the pharmaceutical company Pfizer attempted to acquire the biotechnology company Allergan. Allergan employed a number of defensive tactics, including a poison pill and a shareholder rights plan. Allergan also launched a public relations campaign and pursued legal action. Ultimately, Pfizer abandoned its takeover attempt.

Hostile takeovers can be a significant threat to companies. However, by taking the appropriate steps, companies can protect themselves against these threats. Companies should consider adopting a combination of preventative and reactive measures to ensure that they are well-positioned to defend against a hostile takeover attempt.

Additional Resources

* [Securities and Exchange Commission: Hostile Takeovers](https://www.sec.gov/divisions/enforcement/investor-alerts-bulletins/hostile-takeovers) * [American Bar Association: Hostile Takeovers](https://www.americanbar.org/groups/business_law/publications/blt/2019/09/19_hostile/) * [Mergers & Acquisitions: Hostile Takeovers](https://www.mergersandinquisitions.com/hostile-takeovers/)

M&A Hostile Takeover Defense: What They Don't Teach You at Business School

by Sameer Jain

4.5 out of 5

Language	:	English
File size	:	2449 KB
Screen Reader	:	Supported
Print length	:	113 pages

FREE