Definition of Hostile Takeover
An acquisition of one company by another against the wishes of the target company’s management and board of directors.
Explanation of Hostile Takeover
A hostile takeover is a corporate acquisition attempt in which the acquiring company seeks to take control of the target company against the wishes of its management and board of directors. This is typically achieved by directly approaching the company’s shareholders and offering to buy their shares at a premium price, often through a tender offer or a proxy fight. A hostile takeover can occur when the acquiring company believes that the target company is undervalued or poorly managed, and that it can improve the company’s performance and profitability. The target company’s management may resist the takeover by implementing defensive measures, such as poison pills, staggered board elections, or seeking a white knight, a more favorable alternative buyer. Hostile takeovers can be contentious and disruptive, often leading to legal battles and public disputes. While they can result in significant changes and improvements, they also carry risks and uncertainties for both the acquiring and target companies. The outcome of a hostile takeover can have far-reaching implications for employees, shareholders, and the overall market.