Takeover Strategies, Competitive Bidding and Defence Tactics

The financial benefits and costs of takeovers for shareholders (and other stakeholders) of acquiring and acquired companies and for economies and societies more generally are varied and contested. They are discussed elsewhere in the Handbook. This chapter is agnostic about this debate and instead considers the main mechanisms employed in takeover situations (negotiated and hostile) to enable or frustrate completion of a takeover. The distinction between “negotiated” (or friendly) and “hostile” is not always clear-cut as negotiated takeovers of quoted companies may occur under a more or less explicit threat that a friendly acquirer would, if initially thwarted, launch a hostile bid. Takeover tactics do not have inherent power. Both their choice and effects are influenced by larger dynamics. Before considering specific tactics, three key contexts (corporate governance; takeover strategies; and peaks-troughs) which shape, albeit do not determine, the choice and efficacy of tactics are discussed.