Examine a hostile acquisition and discuss the tactics employed by both the predator and the target...

Examine a hostile acquisition and discuss the tactics employed by both the predator and the target companies. How do you think mergers should be regulated? For example, for the above mentioned tactics and defense strategies should target companies be allowed to employ? Should managers of target firms be compelled to seek out the highest bids? Should they simply be passive and watch from the sidelines?

Expert Solution

Hostile acquisition takes place by acquiring of target company by the predator without agreement. It means that the permission of the target companies is not needed for the acquisition. This happens by directly going to the company's shareholder and buying or by fighting for the change in management. In hostile take over, target company is not willing for the acquisition. They follow various controversial strategy to avoid the takeover situation. One such controversial strategy is golden parachute.

A golden parachute means the top executive will be given high lucrative compensation if the takeover is happening and if he has to lose his position/job. This is a huge cost to the predator which allows them to think about the hostile acquisition.

This is also called as poison pill. There are various other strategies to avoid the hostile acquisition and so they need not be silent and watch. Instead they play a defense mechanism. These defense mechanism makes the acquisition more costlier.

jeff jeffy answered 2 years ago

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