{"id":5578,"date":"2020-03-25T14:15:11","date_gmt":"2020-03-25T12:15:11","guid":{"rendered":"https:\/\/www.intraders.org\/news\/?p=5578"},"modified":"2020-04-01T02:39:39","modified_gmt":"2020-04-01T00:39:39","slug":"merger-acquisition","status":"publish","type":"post","link":"https:\/\/www.intraders.org\/news\/ot\/merger-acquisition\/","title":{"rendered":"Merger & amp; Acquisition"},"content":{"rendered":"\n

POISON PILL
A poison pill is a tactic utilized by companies to prevent or discourage hostile takeovers. A company targeted for a takeover uses a poison pill strategy to make shares of the company\u2019s stock unfavorable to the acquiring firm.
What is a \u2018Poison Pill\u2019
A poison pill is a tactic utilized by companies to prevent discourage hostile takeovers. A company targeted for a takeover uses a poison pill strategy to make shares of the company\u2019s stock unfavorable to the acquiring firm.
There are two types of poison pills:<\/p>\n\n\n\n

  1. A \u201cflip-in\u201d permits shareholders, except for the acquirer, to purchase additional shares at a discount. This provides investors with instantaneous profits. Using this type of poison pill also dilutes shares held by the acquiring company, making the takeover attempt more expensive and more difficult.<\/li>
  2. A \u201cflip-over\u201d enables stockholders to purchase the acquirer\u2019s shares after the merger at a discounted rate. For example, a shareholder may gain the right to buy the stock of its acquirer, in subsequent mergers, at a two-for-one rate.
    Poison Pill Example
    Flip-in poison pills may hold an attached option that permits shareholders to buy additional discounted shares if any one shareholder buys more than a certain percentage, or more, of the company\u2019s shares. For example, a flip-in poison pill plan is triggered when a shareholder buys 25% of the company\u2019s shares. When it is triggered, every shareholder, excluding the holder who purchased 25%, is entitled to buy a new issue of shares at a discounted rate. The greater the number of shareholders who buy additional shares, the more diluted the bidder\u2019s interest becomes and the higher the cost of the bid. If a bidder is aware such a plan could be activated, it may be inclined not to pursue a takeover without board approval.<\/li><\/ol>\n\n\n\n

    Bear Hug
    A bear hug is an offer made by one company to buy the shares of another for a much higher per-
    share price than what that company is worth. A bear hug offer is usually made when there is
    doubt that the target company\u2019s management is willing to sell.
    The name \u201cbear hug\u201d reflects the persuasiveness of the offering company\u2019s overly generous offer
    to the target company. By offering a price far in excess of the target company\u2019s current value, the
    offering party can usually obtain an agreement. The target company\u2019s management is essentially
    forced to accept such a generous offer because it is legally obligated to look out for the best
    interests of its\u00a0shareholders.
    A bear hug can be interpreted as a hostile takeover attempt by the company making the offer, as it is designed to put the target company in a position where it is unable to refuse being acquired.<\/p>\n\n\n\n

    Unlike some other forms of hostile takeovers, a bear hug often leaves shareholders in a positive financial situation. The acquiring company may offer additional incentives to the target company to increase the likelihood that it will take the offer.<\/p>\n\n\n\n

    Be Our InTraders\u2019 Author for Free of Registration to InTraders\u2019 Conferences<\/a><\/h3>\n\n\n\n

    To qualify as a bear hug, the acquiring company must make an offer well above market value for a large number of a company\u2019s shares. Since the target company is required to look out for the best interest of its shareholders, it is often required to take the offer seriously even if there was no previous intention to change the business model or previous announcement of looking for a buyer.<\/p>\n\n\n\n

    At times, bear hug offers may be made to struggling companies or startups in hopes of acquiring assets that will have stronger values in the future, though companies that do not demonstrate an financial needs or difficulties may be targeted as well.<\/p>\n\n\n\n

    Dr. Kirti Miglani Assit Prof TIAS India<\/p>\n\n\n\n

    \"\"
    http:\/\/www.intraders.org<\/a><\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"

    POISON PILL A poison pill is a tactic utilized by companies to prevent or discourage hostile takeovers. A company<\/p>\n","protected":false},"author":2671,"featured_media":5579,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yst_prominent_words":[4325,4331,4349,4339,4324,4340,4348,4333,4335,4337,4327,4342,4341,4343,4332,4344,4334,4338,4328,4329],"class_list":["post-5578","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ot"],"_links":{"self":[{"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/posts\/5578","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/users\/2671"}],"replies":[{"embeddable":true,"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/comments?post=5578"}],"version-history":[{"count":2,"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/posts\/5578\/revisions"}],"predecessor-version":[{"id":5615,"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/posts\/5578\/revisions\/5615"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/media\/5579"}],"wp:attachment":[{"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/media?parent=5578"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/categories?post=5578"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/tags?post=5578"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.intraders.org\/news\/wp-json\/wp\/v2\/yst_prominent_words?post=5578"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}