An individual or entity known as a corporate raider or hostile bidder attempts to acquire a company by purchasing its stocks and replacing its management, regardless of the company’s wishes. This type of suitor is commonly referred to as an unfriendly bidder and is the antithesis of a white knight, who aids a struggling company.
A hostile bidder, also referred to as a corporate raider, is an individual or entity that seeks to acquire a company without the consent of its management. This is achieved by purchasing a significant amount of the company’s stock and subsequently replacing the existing management team with their own personnel. For instance, if a company is facing financial difficulties, a hostile bidder may perceive an opportunity to acquire a substantial portion of its stock at a low price. They would then utilise their ownership to oust the current management and assume control of the company. Another scenario arises when a company receives a takeover offer from a hostile bidder that is not in the best interest of the company or its shareholders. Although the current management may reject the offer, the hostile bidder may persist in their pursuit by acquiring additional stock and attempting to gain control of the company. In both cases, the hostile bidder endeavors to gain control of a company without the approval of its current management, resulting in potential conflicts and disruptions to the company’s operations.
A hostile bidder is a person or entity that makes an unsolicited offer to acquire a company, despite the company’s board of directors and management being opposed to the acquisition.
In some cases, yes. If the hostile bidder is able to acquire a majority of the company’s shares, they may be able to take control of the company and its operations.
Companies have various legal options to defend against hostile bidders, including implementing poison pills, adopting shareholder rights plans, and seeking court injunctions.
In some cases, yes. If the hostile bidder engages in illegal or fraudulent activities during their takeover attempt, they may be held liable for damages.
Hostile bidders may use tactics such as making a tender offer directly to the company’s shareholders, launching a proxy fight to replace the company’s board of directors, or engaging in aggressive public relations campaigns.
In some cases, yes. The company’s management may be able to take actions to make it more difficult for the hostile bidder to acquire a majority of the company’s shares, such as implementing a staggered board or adopting a shareholder rights plan.
A hostile takeover can result in significant changes to a company’s management, operations, and strategic direction. It can also lead to shareholder lawsuits and regulatory scrutiny.
Yes, there are various regulations and laws that govern the process of hostile takeovers, including securities laws, antitrust laws, and regulations specific to the industry in which the company operates.
Yes, shareholders have the right to support a hostile bidder’s takeover attempt by tendering their shares in response to a tender offer or voting in favor of the bidder’s proposed changes to the company’s board of directors.
A company that becomes the target of a hostile bidder should seek legal counsel to understand its options for defending against the bid and protecting the interests of its shareholders and stakeholders.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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