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What can happen in a hostile acquisition?

 

Many Louisiana companies explore every available option when the time comes to expand business operations. For some, merging with another company will be the best result for both entities, enabling the creation of a larger, more profitable business. For other businesses, there may be other companies that are targeted for acquisition – and there are many different ways to accomplish this feat. One of which is known as a hostile acquisition.

What can happen in a hostile acquisition? Well, as the name suggests, this type of acquisition of one company by another isn’t exactly a desired result for everyone involved. In particular, the management team of the company targeted for acquisition will likely be opposed to the transaction. From there, two options will likely be available for the company looking to make the purchase: a proxy fight or a tender offer.

In a proxy fight, there can be a lot of persuasive efforts among stockholders. For example, one set of stockholders will attempt to persuade other stockholders to allow them to vote in their stead – and vote to be acquired by the other company. When a tender offer occurs, the acquiring company will offer to purchase the stock of the company at a premium price – more than what it is actually worth. If the tender offer is rejected by management, the bid can be taken to the stockholders directly.

Of course, all mergers and acquisitions can be complex business transactions. A company in Louisiana that is involved in an attempted hostile acquisition – from either side of the transaction – will need to make sure they have the best legal information available to them in order to make the right decisions.

Source: Investopedia, “Hostile Takeover,” Accessed Sept. 5, 2016

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