take over defenses

100 %
0 %
Information about take over defenses
Finance

Published on January 18, 2009

Author: rajec3

Source: slideshare.net

Take Over defenses MERGER AND ACQUISITION

Introduction Not all mergers are welcome During the 1980s, a variety of devices were developed to defend firms from unwelcome takeover proposals Anti take over defenses Preventive measures Active measures Chapter 19-

Not all mergers are welcome

During the 1980s, a variety of devices were developed to defend firms from unwelcome takeover proposals

Anti take over defenses

Preventive measures

Active measures

Poison Pill Flip in plan Flip over plan Back end plans Voting plans People pill Preventive measures Greenmail Standstill agreement White knights White squire Pac man defense Restructuring Active measures

Poison Pill

Flip in plan

Flip over plan

Back end plans

Voting plans

People pill

Greenmail

Standstill agreement

White knights

White squire

Pac man defense

Restructuring

Active measures

Memorandum Article of Association Corporate charter amendments Shark Repellant Legal existence Corporation’s name Existence purpose Authorized Share Identity of Directors Rules governing the internal management

Corporate charter amendments Common types Classified boards Super majority provisions Fair price amendment Dual Capitalization

Common types

Classified boards

Super majority provisions

Fair price amendment

Dual Capitalization

Classified boards Divided into different classes One class to be reselected each year Delays effective transfer of control in take over Example Suppose twelve members in a group Divided into group of three Hostile bidder has to wait two more annual meetings inspite of holding majority of stocks

Divided into different classes

One class to be reselected each year

Delays effective transfer of control in take over

Example

Suppose twelve members in a group

Divided into group of three

Hostile bidder has to wait two more annual meetings inspite of holding majority of stocks

Super majority provisions Approval by large number of votes 2/3 rd or 80% votes for merger approval Board out clause Give up the super majority provision Interested directors cannot participate in voting on issue of merger

Approval by large number of votes

2/3 rd or 80% votes for merger approval

Board out clause

Give up the super majority provision

Interested directors cannot participate in voting on issue of merger

Fair price amendments Acquirer to pay fair price to shareholders of the firm State in form of minimum price or P/E multiple Use at two tiered bid by the acquirer

Acquirer to pay fair price to shareholders of the firm

State in form of minimum price or P/E multiple

Use at two tiered bid by the acquirer

Dual capitalization New class of securities with voting rights To friendly stockholders Stock holders prefer special voting stocks Increase dividend and power Management retains the voting power

New class of securities with voting rights

To friendly stockholders

Stock holders prefer special voting stocks

Increase dividend and power

Management retains the voting power

Active Anti-takeover defenses

Greenmail Buying back of share at premium Signing a Standstill Agreement Standstill Agreement Not to increase holdings for particular period Accompanied by target’s agreement Acquirer's refusal Prevents falling into hands of another bidder

Buying back of share at premium

Signing a Standstill Agreement

Not to increase holdings for particular period

Accompanied by target’s agreement

Acquirer's refusal

Prevents falling into hands of another bidder

White Knights Another company more acceptable More favorable terms than original bidders Terms required Not to disassemble No layoffs

Another company more acceptable

More favorable terms than original bidders

Terms required

Not to disassemble

No layoffs

White squire Target sells only a block of its stock to third party it considers to be friendly In return, white squire may receive: board seats, dividend, discounted shares Preferred stock usually used in white squire transactions because it enables board to tailor characteristics of stock as described

Target sells only a block of its stock to third party it considers to be friendly

In return, white squire may receive: board seats, dividend, discounted shares

Preferred stock usually used in white squire transactions because it enables board to tailor characteristics of stock as described

Pac-Man Defense Highly aggressive defense technique Counter tender offer in response Possible only if financial resources May result into May defend May end up extremely destructive High debts

Highly aggressive defense technique

Counter tender offer in response

Possible only if financial resources

May result into

May defend

May end up extremely destructive

High debts

Restructuring Going private Buying bulk of the shares Sales of attractive assets Making less attractive Undertaking major acquisitions Draining its excess cash balance Liquidating the firm When liquidation is better than the bid

Going private

Buying bulk of the shares

Sales of attractive assets

Making less attractive

Undertaking major acquisitions

Draining its excess cash balance

Liquidating the firm

When liquidation is better than the bid

Add a comment

Related presentations

Related pages

Corporate Takeover Defense: A Shareholder's Perspective ...

Much has been written, often in dramatic and ominous language, about hostile takeovers and the various steps companies take to prevent them. While most ...
Read more

An Overview of Takeover Defenses - The National Bureau of ...

3 An Overview of Takeover Defenses Richard S. Ruback 3.1 Introduction Takeover defenses include all actions by managers to resist having their firms acquired.
Read more

Takeover - Wikipedia, the free encyclopedia

A "hostile takeover" allows a bidder to take over a target company whose management is ... a common defense tactic against hostile takeovers is to use ...
Read more

Takeover defense financial definition of takeover defense

Since 1989, we have advised clients navigating a full range of critical transactions, including complex mergers, acquisitions, debt and equity financings ...
Read more

Defenses Against Hostile Takeovers - How Hostile Takeovers ...

Defenses Against Hostile Takeovers. There are several ways to defend against a hostile takeover. The most effective methods are built-in defensive measures ...
Read more

Twitter Takeover Defenses May Fly Out the Window 03.02 ...

Um Ihnen die Übersicht über die große Anzahl an Nachrichten, die jeden Tag für ein Unternehmen erscheinen, etwas zu erleichtern, haben wir den ...
Read more

Shareholder rights plan - Wikipedia, the free encyclopedia

A shareholder rights plan, colloquially known as a "poison pill", is a type of defensive tactic used by a corporation's board of directors against a takeover.
Read more

TAKEOVER DEFENSES - Wall Street Instructors - Educational ...

Rules and tax consequences. The same rules and tax consequences that apply to golden parachute payments also apply to silver, tin, and pension parachutes.
Read more