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Hostile takeover reserved slots

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hostile takeover reserved slots

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Reasons for wanting to acquire the company might be access to its distribution channels, client base, market share, technology, or because the acquirer thinks it can improve upon the target's current value and take advantage from stock price appreciation.

There are two main tactics employed to acquire a controlling interest. First, the acquirer may make a tender offer to the company's shareholders.

A tender offer is a bid to buy a controlling share of the target's stock at a fixed price. The price is usually set above the current market price in order to allow the sellers a premium as added incentive to sell their shares.

Paperwork must be filed with the SEC and the acquirer must provide a summary of its future plans for the target company in order to aid the target company's decision.

There are many takeover defense strategies that protect against tender offers, so often times the proxy fight is utilized.

The goal of a proxy fight is to replace board members who are not in favor of the takeover with new board members who would vote for the takeover.

This is done by convincing shareholders that a change is management is needed and that the board members who would be appointed by the would-be acquirer are just what the doctor ordered.

In a crown jewel defense, a provision of the company's bylaws requires the sale of the most valuable assets if there is a hostile takeover, thereby making it less attractive as a takeover opportunity.

The term is often used broadly to include a range of defenses, including issuing both additional debt to make the target less attractive and stock options to employees that vest upon a merger.

A hostile takeover can be a difficult and lengthy process, and attempts often end up unsuccessful. In , for example, billionaire activist investor Carl Icahn attempted three separate bids to acquire household goods giant Clorox, which rejected each one and introduced a new shareholder right plan in its defense.

The Clorox board even sidelined Icahn's proxy fight efforts, and the attempt ultimately ended in a few months with no takeover.

A target firm is an attractive business for a merger or acquisition In the language of mergers and acquisitions, battleground terms meld with bizarre metaphors to create a unique vocabulary.

A company's stock price reflects the company's earnings potential, its future viability, determines management compensation can play a critical role in mergers and acquisitions.

A proxy vote is a vote cast by an entity or person on behalf of another. This sets the stage for a proxy fight between the current management and directors and the group trying to usher in change.

Voting shares, in person or via proxy ballot, is a right every shareholder should exercise.

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