Chapter 2 Takeover

Chapter 2
Oxford University Press 2011. All rights reserved.
Concept of takeover
Is a process wherein an acquirer takes over the
control of the target company

Another aspect to takeover is where an acquirer
acquires substantial quantity of shares or voting rights of the target company.

Is termed as substantial acquisition of interest Acquirer may be an individual, company, any
other legal entity or Persons Acting in Concert with the acquirer

Persons Acting in Concert

Are individuals or companies who act on behalf of
or in coordination with the acquirer to acquire substantial number of shares in the target company
Include holding company or subsidiary company,
mutual funds with its sponsor / trustee / asset management company, etc.
May have a formal or informal agreement with
the acquirer in this regard ..

Bajoria Bombay Dying Tussle: PAC in case of Bajoria:

Mega Resources Mega Stock
Hooghly Mills
Ms Pooja Bajoria Ms Mohini Devi Bajoria Ms Lata Devi Bajoria and
Ms Meenakshi Jati
Open Offer
Shares of the target acquired by the acquirer
through open offer

Is a public announcement to acquire the shares of
the target company

Made to ensure that the shareholders of the target
company become aware of an exit opportunity available to them
Parameters of an Open Offer

Negotiated price under the agreement that
triggers the open offer

Is the highest price paid by acquirer or persons
acting in concert for any acquisitions

Includes shares allotted through public issue or
rights issue during the 26 week period , as statutorily prescribed, prior to the date of the open offer .
Parameters..
Average weekly high and low of the closing prices of shares
as quoted on the stock exchanges, where shares of the target company are traded during 26 weeks or average of the daily high and low prices of shares during the 2 weeks prior to the date of the open offer.
Parameters such as return on net worth of the company,
book value per share, EPS, etc. where shares are not listed
The Torrent group made an open offer to acquire 20% in
Ahmedabad Electricity Company ("AEC") at Rs. 65 per share
Global Trends
Very common in the United States and in the
United Kingdom Very occasional and rare in Germany, Japan or China. The reason:
Germany practices dual board structure Japanese companies have interlocking sets of
ownerships known as KEIRETSU and In China most public listed companies are state owned
Forms of Takeover
Bailout
Involves takeover of a financially sick company
by a financially rich company as per the provisions of the Sick Industrial Companies (Special provisions) Act, 1985
Objective behind this takeover is to bail out the
sick unit from losses
Friendly Takeover
Is one where the acquirer acquires the shares of the
target by informing the board of directors his intention to purchase the shares of the target company
If board feels the offer is worth accepting, it
recommends to the shareholders that the offer be accepted

The acquirer may either acquire the assets or
purchase the stock of the target

Advantages of Friendly Takeover through Purchase of Assets

Allows acquirer to purchase only those assets that
it desires to purchase
Acquirer is not required to take over any
contingent liabilities of the target

Provides the acquirer with an opportunity to
negotiate the price with the board of directors, as the approval of the shareholders is not required.
Advantages of Friendly Takeover through Purchase of Stock

Acquirer has to assume the liabilities of the target
firm
Target firm may continue to operate as an
autonomous subsidiary or it may be merged with the acquiring firm

Approval of the shareholders of the target firm is
needed for this type of acquisition
Hostile Takeover
One where the board of directors of the target
firm disagrees to the offer of the acquirer to purchase the shares, but the acquirer continues to pursue it or makes the offer by by-passing the target companys management
Represents an offer made by the acquirer without
informing the target companys management about their intention of acquiring stake in the company.
A Tender Offer
Is an offer to buy the stock of the target firm either
directly from the shareholders or through the secondary market

Acquirer intends to buy the company's stock to the
target firms board of directors

Proposal carries a clear indication that if the offer is
turned down a tender offer shall be resorted to

Strategy expensive as the price payable is higher than
the market price; also the stock price tends to rise in anticipation of a takeover
A Proxy Fight
Here, the acquirer approaches the shareholders of
the target firm with an objective of obtaining the right to vote for their shares
Hopes to secure enough proxies that would help
in gaining control over the board of directors and replace the incumbents management
Are a very expensive and difficult mode of
takeover for the incumbent management team can use the target firm's funds to pay all the costs of presenting their case and obtaining votes
Creeping Tender Offer
Involves purchasing enough stock from the open
market to bring about a change in management.
Horizontal Takeover
Is a process where a company takes over another
company from the same industry

Basic objective is to attain economies of scale and
increase market share by entering into the market segments of the company taken over
Vertical Takeover
Is one where a company is taken over by any of
its vendors or customers

Can be of two types: backward and Forward
Backward is one where the business of the vendor
is taken over in order to reduce costs

Forward is one where the business of the
customer is taken over in order to access market directly

Conglomerate Takeover
Is one where a company takes over another
company from a totally different industry

Is pursued with the objective of attaining
diversification.
Reverse Takeover
Is a takeover strategy where a private company
acquires a public company

Helps private company to effectively float itself and at
the same time bypass the lengthy and complex process of going public by coming out with an IPO
Makes the company less susceptible to market
conditions
Reverse......
Public company is called SHELL as all that exists of
the original company is its organizational structure.

Biggest problem is that the company comes with
some history, which can be bad, resulting in sloppy record keeping, pending lawsuits and contingent liabilities and some shareholders and the resulting company has to live with this history
Benefits of Takeover
Helps the acquirer to attain increase in sales/ revenues Helps acquirer to venture into new business segments and
markets with ease Improves overall profitability of the entity Helps the acquirer in increasing its market share Reduces competition from the perspective of the acquiring company Reduces overcapacity in industry Helps acquirer to expand the brand portfolio Generates benefits of economies of scale Helps attain increased efficiency as a result of corporate synergies Helps in eliminating jobs that overlap in responsibilities
Weaknesses of Takeovers
Reduces competition and choice for consumers
Results in job cuts

Cultural differences lead to conflict Acquirer often burdened with hidden liabilities of
the target entity

Employees of the target company work in an
environment of fear and uncertainty affecting motivational levels.

Takeover Defences: Bank-mail

A strategy where the bank of the target firm refuses
financing options to a firm that is keen on takeover.

Is done with the objective of preventing acquisition: By depriving the merger through non availability of finance By increasing the transaction costs of the acquirer By delaying the takeover and permitting the target firm to develop other anti-takeover strategies.
Greenmail
Is a practice of purchasing enough shares of
another publicly traded company that poses a threat of takeover for the target company
Threat of a takeover then forces the target firm to
buy those shares at a premium, in order to avoid/suspend the takeover.

Buyback is referred as the Bon Voyage Bonus for
it enables the target company to be left alone by the greenmailer

Crown Jewel Defense

Is a strategy wherein a company facing a threat of
takeover sells off its most attractive assets to a friendly third party or spins off its valuable assets in a separate entity
Makes the target company less attractive for the
company planning a takeover, which then loses interest and defers the takeover bid.
Poison Pill/ Super Poison Put

A strategy adopted to increase the likelihood of
negative results over positive ones for the company attempting a takeover
Derived from warfare terminology - Were pills
laced with poison that spies used to carry and would consume when they would get discovered or captured, in order to eliminate the possibility of being interrogated for the enemy's gain
Represents an anti-takeover defense wherein the
current management team of the target company threatens to quit en masse in the event of a successful hostile takeover
Effectiveness depends on the circumstances of the
takeover - If the management team is efficient and quits en masse, the acquirer would be left without experienced leadership following a takeover. On the other hand, if the current leadership is inefficient he will get fired after the takeover making the poison pill becomes ineffective
Flip-over
Type of poison pill in which the current
shareholders of the target company are given the option to purchase discounted shares/stock after the potential takeover
Strategy involves giving a dividend in the form of
rights whereby the existing shareholder can purchase equity or preference shares at a value that is lower than the prevailing market price
Once takeover is done, the current shareholders
can flip over the rights to purchase the shares at a discount

Strategy results in dilution and price devaluation
of the shares held by the acquirer and defeats the very purpose of the takeover
Gray Knight
Is an informal and ambiguous intervener in the
takeover battle that makes a counter bid for the shares of the target company
Interveners bid causes a lot of confusion amongst
the original acquirer and the target company as the intentions behind his making a counter bid are not clear
Jonestown Defense/Suicide Pill

Defense mechanism against hostile takeovers Target firm employs tactics that might threaten the
target firms existence, so as to thwart an imposing acquirers bids

Is known as Suicide Pill as it threatens the very
existence of the target

Represents an extreme version of poison pill.
Killer Bees
Here the target company employs firms or
individuals to fend off a takeover bid as is either is unable to do this on its own / does not want to be seen doing so.
So employs other firms or individuals to do the job
for it
Leveraged Recapitalization
Is a strategy used to fend off a hostile acquisition Here the target company adopts one of the two
possible strategies:
Borrow significant additional debt that facilitates
repurchase of stocks through a buyback program or Distribute a liberal dividend among the current shareholders
.
Leads to a sharp increase in the share price and
makes target less attractive as the acquirer has to pay more for the target company minimizing the gains for the acquirer
Is a form of poison pill that serves two purposes,
viz. an increase in the debt of the target making the acquisition costly and maintains shareholders interest in takeover attempts
Lock-up Provision
Represents a strategy wherein an option is
granted by the seller to the buyer to purchase a target companys stock as a prelude to a takeover.
Acquirer requires a lock up agreement before
making a bid as it facilitates negotiation progress - as a result of this arrangement, the major or controlling shareholder gets effectively "lockedup" and is not free to sell the stocks to a party other than the potential buyer .
Lock-ups can either be:

Soft - one that permits the shareholder to terminate the
agreement if a better offer comes along

Hard - one that is unconditional and cannot be terminated Stock lock-up Where the bidder is either allowed to purchase
the Authorized but Unissued Share Capital of the controlling stockholder or the shares of one or more large stockholders.
Asset lock-up/Crown Jewel Lock up where the target firm
grants an option for the acquisition of an asset.

May take any one of the following forms: Break-up involving payment of termination fees
Giving an option to the target shareholders to buy target
stock
Giving rights to target shareholders to purchase target assets
Forcing the vote provisions in merger agreements, and
Enforcing agreements with major shareholders viz. voting
agreements, agreements to sell shares, or agreements to tender.

Nancy Reagan Defense

Is one where the boards of directors of the target
company just say no to the formal bid made by the acquirer to the shareholders to buy their shares.
Board has authority of refusing the company making
a takeover attempt and the matter ends there.

Constitution of the company gives them this
authority.
The term refers to a catch-phrase coined by former
United States First Lady Nancy Reagan advocating abstinence from recreational drug use.
For Example:
A discussion of a takeover of the Walt Disney Company by Comcast
Non-voting Stock
Are shares that provide the shareholder with very
little or no voting rights on issues such as election of the board or mergers

Issued to individuals who want to invest in the
companys profitability and success but are not interested in voting rights
Preference shares are typically non-voting shares. Help in making the company a closely held act as
a takeover defense
.
For Example:
Warren Buffetts Berkshire Hathway Corporation has two classes of shares viz. Class A shares that are voting stocks and Class B that are non-voting shares. The Class B stocks carry 1/200th of the voting rights of the Class A, but 1/30th of the dividends
Pac-Man Defense
Is commonly used to prevent a hostile takeover Here the target company counters the takeover bid by
trying to acquire the bidders company i.e. the target company makes a counter offer to purchase the business of the acquiring company
Diverts the acquirer attention as the acquirer gets busy
in preventing the takeover of their own company
For Example:
The hostile takeover of Martin Marietta by Bendix Corporation in 1982. In response, Martin Marietta started buying Bendix stock with the aim of assuming control over the company. Bendix persuaded Allied Corporation to act as a "white knight," and the company was sold to Allied the same year.
Pension Parachute
Companies often carry surplus cash in the pension
fund, which is put to use as and when companies require resources

Is a type of poison pill strategy that prevents the
acquirer to go ahead with a hostile takeover by utilizing the surplus cash in the pension fund for financing the acquisition
Ensures through corporate governance practices that
resources in the pension fund account do not get used for financing hostile takeover
The concept of pension parachute was evolved by
the law firm Kelley Dyer and Warren, which they implemented for Union Carbide. The design was upheld in Union Carbides litigation with GAF Corporation. GAF Corporation subsequently withdrew its hostile takeover bid, but profited $81 million from sales of Union Carbide stock.
People Pill
Is another defensive strategy adopted to ward off
a hostile takeover.
Here the management of the target company
threatens the acquirer that in the event of a takeover, the entire management team will resign.
This strategy is a variation of poison pill defense
strategy.
Lollipop Defense
Is a strategy wherein the target creates barriers
outside its periphery to protect the company from a takeover

Called lollipop defense as the company is
compared to lollipops that have a hard crunchy exterior but a soft chewy centre i.e. the takeover is made difficult by the barriers (hard crunchy exterior) but the company in general is an attractive takeover target (soft chewy centre) ..
Target company presumes that creating a lollipop
defense provides adequate security from the takeover attempt

Fact is once the acquirer is able to overcome the
barriers (hard crunchy exterior), the target stands exposed (soft chewy centre) and takeover then becomes a matter of time
Macaroni Defense
Is a strategy wherein the target issues a large
number of bonds in the market carrying a peculiar condition i.e. if the company is taken over, the bonds will have to be redeemed at a very high price.
High redemption price of the bonds acts as
deterrence and the acquirer may be forced to give up the takeover bid
Called Macaroni defense for the target is facing a
danger of takeover and the redemption price of the bonds starts expanding like Macaroni being cooked
Lobster Trap (comparable to Chakravyuh)

Is one where the target firm issues a charter
preventing individuals with more than 10% ownership of convertible securities such as convertible bonds, convertible preference shares, and warrants from transferring these securities to voting stock
Charter becomes a barrier and hostile takeover
becomes difficult
Makes it becomes difficult for acquirer to exit the bid
as can neither acquire controlling stake nor can it exit from the limited stake acquired
Shark Repellent/Porcupine Defense or Provision

Shark repellent is a repellent applied by deep sea
divers to prevent sharks from attacking them The target company makes special amendments to its bylaws that become active only when a takeover attempt is announced
Objective of the special amendments is to make the
takeover less attractive to the acquirer

In such a case, the acquirer is termed as the shark
and the proposed amendments are repellents that prevent the shark from attacking ..
May not always be in the best interest of the
shareholders as may adversely affect the financial health of the company

Strategies adopted include under shark repellent
Poison pills Scorched earth policy Golden parachutes and Safe harbor
Poison Put / Event Risk Covenant

Is a strategy wherein the bondholders and
stockholders are assigned a right whereby they can demand redemption of stock before maturity, at a value in excess of the par value OR Allows the shareholders to purchase the companys shares at a very attractive fixed price in case of restructuring of the company, excess distribution of dividend
Helps the management of the company to deter
the takeover attempt by making the target very costly for the acquirer
Strategy can work against the company too
during low liquidity bondholders can pressurize the company to go into reorganization or to increase the borrowing cost
Safe harbour
The target company creates barriers making it
difficult for the acquirer to succeed in their takeover attempt

Barriers work as if the target is safe in the
harbour and beyond the reach of the acquirer (shark).
Scorched-earth Defense
Concept originated as a military strategy Involved a defence strategy wherein a retreating
army would burn crops and trees, so that there would be no fresh supplies to the advancing army.
As an anti-defense strategy, scorched earth policy
involves liquidating valuable and desired assets and assuming fresh liabilities
Makes proposed takeover becomes unattractive to
the acquiring firm

Selling the Crown Jewels

Represents the most valuable unit or department
of a company.
Categorized as crown jewels based on their
profitability, value of assets owned, and future growth prospects

Target company creates anti-takeover clauses,
whereby the company gets the right to sell off the crown jewels if a hostile takeover occurs
Showstopper
Implies inserting such a clause that imposes additional
financial burden on the acquirer in the event of a takeover

Example:
Acquirer is required to pay for the offer within a
stipulated period. If the acquirer fails to pay the dues, the shareholders of the target may grant extension, subject to the acquirer agreeing to pay interest to the shareholders for the delayed payment. Where the acquirer refuses to pay the additional amount, the agreement falls through and acquirer is required to pay compensation
Acquirer is the loser in either case if the deals fall
through
Either pay the interest
Pay compensation
Creates financial burden on the acquirer
Staggered Board of Directors

Is a defense wherein a certain percent of the companys Director
are replaced every year and not the entire board being replaced annually
Makes it difficult for the acquirer to seize control over the target,
as the hostile bidder has to win more than one proxy fight at successive shareholder meetings in order to exercise control over the target
In order to facilitate staggering Directors are classified into group
or class and each group required to vacate their post by rotation .
Institutional shareholders in US have been
increasingly calling for an end to staggering / declassifying boards of directors so that the practice of retiring by rotation comes to an end
Reason - All desirable names drop from the list of
the directors affecting investors confidence.
Standstill Agreements
Here an unfriendly bidder agrees to limit his holdings
of a target firm
Made possible by the target firms willingness to
purchase the potential acquirers (raider s) shares at a premium price

Enacts a standstill or eliminates chances of a takeover
attempt by the potential raider

Gives the target company time to build up other
takeover defences
...........
Can also take another form - wherein two or more
parties agree not to deal with other parties in a particular matter for a specified period of time For Example: An agreement not to go ahead with an acquisition of other parties
Allows the concerned parties to devote more time for
negotiation, due diligence, and details of a potential acquisition/defense they are currently working on
Targeted Repurchase
The target firm purchases back its own shares from an
unfriendly bidder at a price well above market value

Numbers of shares re-purchased help target firm to
regain controlling interest in the company by having adequate shareholders votes to prevent the hostile acquisition
Targeted repurchase considered a success if the strategy
results in abandonment of the takeover attempt ..

Not necessary that the raider company may accept the
price offered
Here the raider continues with its attempt of hostile
takeover and the target generally combines the targeted repurchase offer with another strategy
For Example: Setting up a holding company that
receives all acquired shares and starting the process of converting the same into employee stock ownership plan (ESOPs) ..
Defeats the very objective of pursuing a hostile
takeover as raider left with no other option but to accept a market price for the shares under their control
Refusal to accept this generates risk of the shares
becoming worthless, once ESOP is approved by the regulatory authorities
Top-ups
Is a type of stock repurchase program Here shares are repurchased from the existing
shareholders of the company

Buyback results in immediate reduction of the
voting power of the shareholders

Shareholders may however subsequently increase
their holdings through additional purchases which is called a top-up ...........

For Example:
Company X holds 10% shares in a company, which implies
that it has 10% voting power too. Company Y offers to purchase 5% of the shares from Company X with the latters consent. This purchase also reduces the voting power of Company X to 5%. If at a later date, Company X wants to increase its voting rights to say 8%, it can purchase 3% shares form the open market. This 3% purchase is called top up.
Advantage of top up strategy is that it provides the
target company with time for enhancing and strengthening its takeover defense mechanism
Treasury Stock
Also known as reacquired stock Are shares/stock bought back by the issuing company
with the objective of reducing the amount of outstanding stock in the open market
Is a tax-efficient tool of giving cash to shareholders
instead of dividend
Strategy adopted by companies to protect the
company against a takeover threat

.
Shares repurchased either cancelled or held for
reissue
Knows as Treasury shares/stock when not sold Have the following characteristics:
Do not involve payment of any dividend Have no voting rights Should not exceed the maximum proportion of total
capitalization specified by relevant legal provisions Possession of shares does not give the company the right to vote, rights of a shareholder, receive dividends, or to receive any part of the assets on liquidation
White Knight
Is a situation where a target faces a hostile takeover
attempt from a company and is struggling to avoid the same

At the moment another company makes a friendly
takeover offer to the target company in order to help the target successfully avoid the hostile takeover bid
Friendly takeover offer is to save the target from the
hostile attempt and the company making a friendly offer called a white knight
White Squire
Is similar to a white knight Only difference is that a white squire exercises a
significant minority stake, as opposed to a majority stake.

Does not have any intention of getting involved in
the takeover battle, but serves as a figurehead in defense of a hostile takeover due to the special voting rights it holds for its equity stake holds in the company
A Voting Plan or Voting Rights Plan

Type of poison pill that the target company issues
against hostile takeover attempts

Plan implemented when the companys constitution
provides for shares that carry superior voting rights compared to ordinary shares
When an unfriendly bidder acquires a substantial
voting stock, it may still not be able to exercise control because the stock carrying superior voting rights will help the company fight the hostile takeover bid .
For Example:
Asarco had a voting pattern wherein holding 99% of the companys common stock would give the holders only 16.5% of the voting power
Whitemail
Is another strategy wherein the target company
issues large number of shares to a friendly party at a price quite below the market price
Forces the acquiring company to purchase these
shares from the party to complete the takeover

Strategy discourages takeover by making the deal
more difficult and expensive as the corporate raider is required to purchase shares from a party that is friendly to the target company ..
Once takeover is averted the target company may
either buy back the issued shares or leave them floating in the market
Takeover Code
Takeover represented one major unhealthy practice SEBI issued Substantial Acquisition of Shares and
Takeover Regulations in 1994.

Covered both friendly and hostile takeovers
In a friendly takeover SEBI keen on making sure
that the minority shareholders get fair treatment

Concern was deeper in hostile takeover as the
acquirer goes ahead with its plan without the knowledge and against the wishes of the existing management
SEBI incorporated provisions to make takeover
transparent
Excluded bailout takeover of companies i.e.
BIFR cases
Provisions were found inadequate due to in-built
ambiguity and loop-holes and failures in takeovers

Failures resulted in appointment of Justice P.N
Bhagwati Committee to:

Review the guidelines issued in 1994 Study the effect of takeovers and mergers on
securities market To evolve appropriate provisions for regulating takeovers and mergers .
Committee concluded:
Strong need for takeover code to retain the confidence
of retail investors in the capital markets Need to provide an exit opportunity to the investors in case they do not want to continue with the new management Full and truthful disclosure to be made on all material information relating to the open offer to facilitate informed decision Acquirer to ensure sufficiency of financial resources for the payment of acquisition price to the investors Disclosures be made on all material transactions at the earliest opportunity ............
Clause 40 A and B of the Listing Agreements introduced
to protect Minority Shareholders interest

Clauses prescribe a basic framework pertaining to
initial disclosure before going ahead with acquisition of shares from the public
Code does not permit a "poison pill" defense, but
empowers Indian companies to block hostile takeovers by foreign companies through Press Note 18 .........
Press Note 18
Is in a series of press releases issued by the Indian
Ministry of Industry in 1998

Provisions include:
Automatic route for FDI and/or technology collaboration would
not be available to those who have or had any previous joint venture or technology transfer / trademark agreement in the same or allied field in India Investors of technology to the suppliers of the above category need to seek the Foreign Investment Promotion Board / Project Approval Board (FIPB/PAB) route for joint ventures or technology transfer agreements (including trademarks)
.
Giving detailed circumstances in which they find it necessary
to set up a new joint venture/enter into new technology transfer (including trademark). Onus on investors/technology suppliers to provide the requisite justification and also proof to the satisfaction of FIPB/PAB that the new proposal would not in any way jeopardize the interests of the existing joint venture or technology/trademark partner or other stakeholders Rejection or acceptance of proposal with or without conditions is the sole discretion of FIPB/PAB recording the reasons for doing so Foreign companies wanting to set up new operations in India need to furnish a no objection certificate from Indian joint venture partners, past or present Certificate has to be submitted to the FIPB
.
Regulations are stringent but there is a strong
need to keep reviewing the regulations so that they remain in tune with time.
Thank you!

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control of the target company

acquires substantial quantity of shares or voting rights of the target company.

other legal entity or Persons Acting in Concert with the acquirer

Persons Acting in Concert

the acquirer in this regard ..

Bajoria Bombay Dying Tussle: PAC in case of Bajoria:

Oxford University Press 2011. All rights reserved.

through open offer

the target company

company become aware of an exit opportunity available to them

Oxford University Press 2011. All rights reserved.

Parameters of an Open Offer

triggers the open offer

acting in concert for any acquisitions

Ahmedabad Electricity Company ("AEC") at Rs. 65 per share

Oxford University Press 2011. All rights reserved.

Oxford University Press 2011. All rights reserved.

Involves takeover of a financially sick company

sick unit from losses

Oxford University Press 2011. All rights reserved.

recommends to the shareholders that the offer be accepted

purchase the stock of the target

Advantages of Friendly Takeover through Purchase of Assets

contingent liabilities of the target

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Advantages of Friendly Takeover through Purchase of Stock

autonomous subsidiary or it may be merged with the acquiring firm

needed for this type of acquisition

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directly from the shareholders or through the secondary market

target firms board of directors

turned down a tender offer shall be resorted to

Creeping Tender Offer

Involves purchasing enough stock from the open

market to bring about a change in management.

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company from the same industry

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its vendors or customers

Backward is one where the business of the vendor

is taken over in order to reduce costs

customer is taken over in order to access market directly

Is one where a company takes over another

company from a totally different industry

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acquires a public company

the original company is its organizational structure.

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Oxford University Press 2011. All rights reserved.

Results in job cuts

the target entity

environment of fear and uncertainty affecting motivational levels.

Takeover Defences: Bank-mail

financing options to a firm that is keen on takeover.

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buy those shares at a premium, in order to avoid/suspend the takeover.

it enables the target company to be left alone by the greenmailer

Crown Jewel Defense

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Poison Pill/ Super Poison Put

Represents an anti-takeover defense wherein the

Once takeover is done, the current shareholders