Hostile takeover
Also known as: hostile bid
A hostile takeover is an attempt that the target company's opposes, pursued anyway by the acquirer, usually by appealing directly to instead of negotiating a deal with management. This contrasts with a friendly merger, where the two boards agree on terms and jointly recommend the deal to before it is announced.
Acquirers typically pursue a hostile deal through a , buying shares directly from at a premium to the market price, or through a , trying to win votes to replace board members who oppose the deal with directors who will approve it. Sometimes an acquirer uses both tactics together to increase pressure on the target.
Target companies facing a hostile bid can deploy various defenses, including a that makes an unwanted prohibitively expensive, seeking a friendlier acquirer known as a white knight, or making the case directly to that the board's independent plan will create more value than the hostile offer. Hostile takeovers tend to be contentious and can drag on for months, with the outcome often decided by which side can convince the largest that its version of the company's future is more valuable.