TAKEOVER BID

An attempt of acquiring the majority share in a firm by another firm. There are various terms to show the ‘tactics’ applied in such bids either by the bidder or the bidded firms:

Black Knight

The launch of an unwelcome takeover bid (as the Mittal’s for the Arcelor in recent past).

Golden Parachute

A generous severance term written into the employment contracts of the directors (of a firm) which makes it expensive to sack them if the firm is taken over.

Green Mail

A situation of takeover bid when the bought-up shares by a potential bidder is actually being bought by the directors of the firm itself.

Leveraged Bid

A takeover bid being financed primarily by the loan.

Pac-man Defence

A situation when the firm being bidded for takeover, bids for the bidder firm

itself–also known as reverse takeover bid.

Poison Pill

A tactic used by the firm being bidded of merging with some other firm in order to make itself less attractive (financially or structurally) to the potential bidder.

Porcupine

Any agreements between the firm being bidded and its suppliers, creditors, etc., which are so complex that after the takeover the bidder firm feels diffculties integrating it.

Shark Repellants

The measures specially designed to discourage takeover bidders (e.g., altering the firm’s articles of association to increase the proportion of shareholder votes needed to approve the bid above the usual 50 per cent level, etc.).

White Knight

The intervention of a third firm in a takeover bid which either merges with or takes over the victim firm to rescue it from the unwelcome bidder.