Firms That Implement Anti-Takeover Tactics

Firms That Implement Anti-Takeover Tactics

Killer Bees

The companies or individuals who will assist in avoiding takeovers of other firms. The killer bees will consist of:

  • Accountants
  • Tax specialists
  • Investment bankers
  • Attorneys

They avoid a takeover by forming and implementation of strategies that are present for anti-takeover. Continue reading about taking overtrading. The implementation will make the company that has been targeted look unattractive or the acquirer will find it is very difficult to be acquired as the acquirers will be pushed to pay high costs or by dilution of shareholders of the acquirer.

In the year of 1980s, there was a craze of a hostile takeover where killer bees were implemented a lot and as the name suggests they perform an action on behalf of a company that is under the threat of a hostile takeover. In order to prevent the hostile takeovers, all the types of strategies and methods are employed. There is also the inclusion of a defense known as shark repellents where the company is made not much attractive or less profitable to the acquirer which is similar to poison pills and suicide pills in which case the firm would be made bankrupt on purpose.

Form of Defenses

There was another strategy known as a Pac-Man defense which was inspired by the vintage arcade game which used the mechanism of eat-or-be-eaten was used. In this tactic, the tables would be turned by the targeted firm on the acquiring firm when takeover bidding would be done by the target firm. There is a trap where a provision would be passed by the target company which will prevent all the shareholders who own stake which is more than 10% from converting assets that are possible to be converted into voting stock. This will be preventing huge shareholders from obtaining votes just enough to push the board of directors to agree to the merger.

Greenmail was another tactic that was largely famous in the year of 1980s. In this strategy, the target firm will purchase back its shares that have been acquired by the raider recently at a much more price. The stocks are brought at the expense of the shareholders. In return, the raider should agree that they will not be attempting to take over the frim again. The completion of acquisition can be made very expensive by making use of whitemail where a huge number of shares are issued at a much lower price than they are in the market.