What is a Hostile Takeover?
A hostile takeover refers to the acquisition of a company by another company or individual without the support or approval of the target company's board of directors. It is a form of corporate takeover in which the acquiring company uses aggressive tactics, such as launching a tender offer or engaging in a proxy battle, to gain control of the target company.
Hostile takeovers can be motivated by a variety of factors, including the desire to acquire valuable assets or intellectual property, to expand the acquiring company's market share or product line, or to increase shareholder value through cost savings or other synergies. They can also be motivated by a belief that the target company's management is underperforming or that the target company is undervalued.
Hostile takeovers can be resisted by the target company through various defense mechanisms, such as adopting a "poison pill" (issuing new shares to dilute the value of existing shares), implementing a "golden parachute" (providing generous severance packages to top executives in the event of a takeover), or entering into a "white knight" agreement (finding a friendly bidder to purchase the company and fend off the hostile bidder).
Hostile takeovers can be controversial and can have significant consequences for the target company's employees, customers, and shareholders. They can also lead to regulatory scrutiny and legal challenges. As a result, they are often opposed by many stakeholders and can be subject to significant media attention.