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Transcript of Hostile Takeover
Tender offer - Offer above market price
Creeping tender offer- Furtively acquire shares with aim to obtain majority
Proxy fight- Access to vote of change of board of directors through large shareholders Types of
Hostile Takeover: Defense Strategies used to:
Fend off acquiring companies
Make the company look undesirable
Preventive or Reactive
Some strategies are used by acquiring firms
- Bear hug ( a form of tender offer)
- Black and Grey Knights Preventive Measures Easy to put into action
- Change control clauses
- Poison Pills
- Litigation Reactive Measures Expensive
Target company know it is being acquired
White and Yellow Knights Example Kraft & Cadbury
HP & Compaq
Yahoo & Microsoft Takeover Timeline Why Acquiring Cadbury? Acquisition Outcome An online advertising powerhouse The LARGEST dotcom Takeover The Bear Hug Offer Blended Offer
Proxy Fight Indication Result and Impact All outstanding Yahoo common stock
$31 per share
$44.6bn total equity value
62% premium Microsoft's Takeover Strategies Attack the logic
Seek for White Knights
Staggered Board Yahoo's Defense Strategies Microsoft abandoned the deal
Yahoo's business and financial performance devastated
Lose-lose situation Conclusion Neoclassical view
- Maximisation of shareholders' wealth
- Self benefits before shareholders' wealth maximisation Who Benefits? Acquisition can be made on friendly or unfriendly terms.
Types of Hostile takeover
Beneficiary parties Cross-border deal
no monopoly or competition issues Cadbury:
Help Kraft enhance product line (e.g. India) Gain better Scale to compete with global confectionary competitors - Mars Inc, Nestle SA. Kraft:
immense growth potential
outstanding returns for Cadbury's Shareholders Kraft= world’s largest confectionery company.
Kraft Food’s base business:
income growth and margin expansion
high-quality top-line growth
strong operating gains.
Cadbury business: solid financial results 1st quarter net revenue= 26.0% increase to $11.3billion
operating income= increased 2.6% to $1,206million “one of the most fiercely contested takeover the City (London) has seen in recent years.” (Ceoworld.biz, 2010). THANK YOU