Today's word: DEFENSIVE MEASURE - SHARK REPELLENT
Theme for this fortnight: MERGERS & ACQUISITIONS
Theme for this fortnight: MERGERS & ACQUISITIONS
Companies may
implement "defensive measures" (sometimes called "shark
repellent") to help resist being acquired by another company, or to
permit a greater opportunity to negotiate better price and terms with the
bidder. Common defensive measures include "poison pills,"
which often permit the target company's shareholders to purchase additional
equity to dilute the bidder, "staggered boards," which provide
for the election of directors in annual tranches, making it more difficult for
the bidder to replace a majority of entire board quickly, and supra-majority
voting requirements. Business entity and securities laws may govern the
adoption of defensive measures. Companies should consider their duties to
equity holders and others in determining whether these measures are in the
Company's best interests. Investors often resist defensive measures, due to
their impact on potential sale transactions.
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