hostile takeover

Examples of hostile takeover in the following topics:

• Benefits of Repurchasing Shares

  • The company may feel that the shares are undervalued, an executive's compensation may be tied to earnings per share targets, or it may need to prevent a hostile takeover.
  • A company can take over another firm if it holds enough of the other takeover target's shares (the buyer of the shares is called the bidder, and the company it is trying to buy is called the takeover target).
  • The bidder is buying the takeover target's shares in an attempt to purchase enough to own it.
  • Assuming the firm does not want to be taken over this way, the takeover attempt is called hostile.
  • Furthermore, it can prevent future takeover attempts.

• The Cost of New Common Stock

  • Depending on the scale of shares available, the organization must consider takeover risks

• Securities Act of 1933

  • In cases of mergers, buyouts or takeovers, owners of securities who had previously filed Form 144 and still wish to sell restricted and controlled securities must refile Form 144 once the merger, buyout, or takeover has been completed.

• Types of Transactions

  • Transactions can be mergers or acquisitions, made with cash or stock, and they can be friendly or hostile.
  • Whether a purchase is perceived as being a "friendly" one or a "hostile" depends significantly on how the proposed acquisition is communicated to and perceived by the target company's board of directors, employees, and shareholders.
  • In the case of a hostile deal, the board and/or management of the target is unwilling to be bought or the target's board has no prior knowledge of the offer.
  • Hostile acquisitions can, and often do, ultimately become "friendly," as the acquirer secures endorsement of the transaction from the board of the acquiree company.

• Current Issues in Finance

  • Several major institutions failed, were acquired under duress, or were subject to government takeover, including Lehman Brothers, Citigroup, Fannie Mae, and Freddie Mac, among several others.The crisis rapidly developed and spread into global economic shock, resulting in a number of European bank failures, economic crises in Iceland, declines in various stock indexes, and large reductions in the market value of equities and commodities.

• Repurchasing Stock

  • Another motive for stock repurchase is to protect the company against a takeover threat.