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In M&A transactions, a defense mechanism (also known as a defense strategy) is any set of procedures that are employed by a target company to prevent a hostile takeover. A hostile takeover is a type of acquisition in which a bidder takes over a target company without the consent, and against the wishes, of the management or board of directors ...
Mar 13, 2024 · Defense mechanisms are behaviors that people use to separate themselves from unpleasant events, actions, or thoughts. Similarly, in an M&A, the target firm takes a few measures to resist the takeover. Mergers and acquisitions (M&A) are frequently used to broaden a company's reach, enter new markets, or increase market share.
- Abhinav Bhardwaj
- Stock repurchase. Stock repurchase (aka self-tender offer) is a purchase by the target of its own-issued shares from its shareholders. This is an effective defense that successfully passed such prominent antitakeover defense cases as Unitrin above and Unocal Corp.
- Poison pill. Poison pill (aka shareholder rights plan) is a distribution to the target’s shareholders of the rights to purchase shares of the target or the merging acquirer at a substantially reduced price.
- Staggered board. Staggered board is a board in which only a certain number of directors, usually one third, is reelected annually. It is a powerful antitakeover defense, which might be stronger than is commonly recognized.
- Shark repellants. Shark repellants are certain provisions in the target’s charter or bylaws deterring an acquirer’s desirability of a hostile takeover.
Jun 19, 2019 · 3.1 M&A Process. Mergers and acquisition process involves the following steps: 1. Formulation of strategy and identification of target. 2. Target evaluation and analysis. 3. Reaching out to target and entering into deal negotiations. 4.
- Vinod Kumar, Priti Sharma
- 2019
Mar 22, 2024 · The Pac-Man Defense is a defensive strategy employed by a targeted company to thwart a hostile takeover attempt by turning the tables and acquiring the would-be acquirer instead. The primary goal of the Pac-Man Defense is to prevent a change in leadership and maintain control of the company. It allows the targeted firm to remain independent and ...
Jun 29, 2022 · Shareholders are tempted by the low price to buy more stock, thereby diluting the acquirer's ownership percentage. This makes the takeover more expensive for the acquirer and could potentially ...
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Jul 30, 2021 · The Pac-Man defense is a defensive tactic used by a targeted firm in a hostile takeover situation. In a Pac-Man defense, the target firm then tries to acquire the company that has made a hostile ...
