occurs when a company attempts to buy out another whether they like it or not. A hostile takeover can occur only through publicly traded shares, as it requires the acquirer to bypass the board of directors and purchase the shares from other sources. This is difficult unless the shares of the target company are widely available and easily purchased (i.e., they have high liquidity). A hostile takeover may presage a corporate raid.
Refers to the takeover of a company by an acquiring company or raider against the wishes of the target company's current management and board of directors. If the offer price is high enough, shareholders may vote in favor of the takeover even if management resists. A hostile takeover can be converted to a friendly takeover if the offer price is increased sufficiently to change the target company's management attitudes. (See Shark Repellent; Poison Pill)
Usually, a TENDER OFFER by an outside bidder is an attempt at a HOSTILE TAKEOVERS of a TARGET COMPANY. The law concerning hostile takeover attempts is very complex and involves both state corporate law and federal tender offer laws and rules contained in the 1934 ACT. State laws govern the validity of anti-takeover measures, such as LOCK-UP OPTIONS and POISON PILLS. Federal tender offer rules govern the manner in which a third-party bidder may make a hostile TAKEOVER BID.
A hostile takeover is an attempt to take control of a company against the will of the firm's executives or board members. It is pursued by cornering the stock of a company on the market or through a takeover bid to publicly purchase shares in the firm on the market. A company whose market valuation is lower than its net asset value is more likely to become the target of hostile takeover bids, because the potential acquirer has a chance to make a larger profit than the acquisition cost if it is able to buy the targeted firm and then sell its assets. So far, few hostile takeovers have been conducted against Japanese firms. In late 2003, a U.S. investment fund made a takeover bid against Yushiro Chemical Industry Co. and Sotoh Co., a major dyer/finisher of woolen fabrics. Also, Sumitomo Mitsui Financial Group Inc. recently considered such a takeover attempt against UFJ Holdings Inc. when it was contemplating a business integration with Mitsubishi Tokyo Financial Group Inc.
An acquisition of one company by another despite resistance from the target company's board. Often an acquirer will take its transaction directly to the shareholders of the target company, offering to buy their shares through a tender offer or seeking their approval to remove opposing members from the target company's board.