Jeanette Gorzala The Art of Hostile Takeover Defence

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2 Jeanette Gorzala The Art of Hostile Takeover Defence IGEL Verlag

3 Jeanette Gorzala The Art of Hostile Takeover Defence 1.Auflage 2010 ISBN: IGEL Verlag GmbH, Alle Rechte vorbehalten. Dieses ebook wurde nach bestem Wissen und mit größtmöglicher Sorgfalt erstellt. Im Hinblick auf das Produkthaftungsgesetz weisen Autoren und Verlag darauf hin, dass inhaltliche Fehler und Änderungen nach Drucklegung dennoch nicht auszuschließen sind. Aus diesem Grund übernehmen Verlag und Autoren keine Haftung und Gewährleistung. Alle Angaben erfolgen ohne Gewähr.

4 IGEL Verlag

5 Table of contents 1. Abstract Purpose and Scope Overview and Structure 2 2 Conceptual Framework Historical development of M&A Hostile Takeovers Definition Economic rationale Strategic and Operational Motivations Management Control Takeover Process Anti-Takeover Defence Pre-Bid Defence Staggered Board Super-Majority Provisions Fair Price Amendment Dual-Class Recapitalization Restricted Voting Rights Golden Parachute Poison Pill Poison Put Post-Bid Defence Greenmail Standstill Agreement Asset Restructuring Liability Restructuring White Knight Litigation Pac-Man Defence Suicide Pill Latest Development and Outlook 26 3 Empirical Research Research Approach Sample Definitions and Terminology 32 I

6 4 Empirical Results Statistical Findings Development Over Time Geographic Distribution Breakdown by Regions Cross-Border vs. Domestic Transactions Sector Distribution Breakdown by Industrial Sectors Inter-Sector vs. Intra-Sector Transactions Transaction Volume Transaction Outcome Defence Strategy Pre-Bid Defence Post-Bid Defence Combined Strategy 50 5 Final Conclusion Key Findings Limitations and Further Research 54 6 Appendix List of Figures List of Tables 56 7 References 57 II

7 1. Abstract 1.1 Purpose and Scope The market for corporate control had been the playfield of bust-up artists and speculators seeking short-time profits during the 1980s. At that time takeover battles resembled Wild West shootouts, where greenmailers and predators weaponed with Saturday night specials and bear hugs fought against corporate managers and white knights, backed by poison pills and shark repellents. By only taking a short glimpse of the takeover games today you will no longer see legends like Carl C. Icahn or Kirk Kerkorian carve up their junk-bond financed raids for a short lived profit. The landscape of the market for corporate control has changed, as far as now strategy and synergy are the name of the game. Hostile takeovers have become an accepted part of today s M&A activity, however they are still viewed as the most radical and spectacular way to exercise corporate control. The high level of hostile activity during the 1980s had also encouraged many innovations in the art of hostile takeover defence. Until today antitakeover defence has reached a very sophisticated level and most companies have erected formidable defences to counter aggressive corporate raiders. A targets anti-takeover arsenal can be segmented into pre-bid and post-bid measures. Prior to the receipt of an unsolicited offer proactive defence strategies can be put in place to decrease the likelihood of a hostile takeover attempt. Once approached by the predator a wide spectrum of post-offer measures can be employed as a direct response to a received hostile takeover bid. The aim of this thesis is to provide a global perspective on hostile takeover defence during the latest merger wave. The focus lies on firstly determining the most common anti-takeover defence strategies and then in a second step evaluating their effectiveness to ward off corporate raiders. For this purpose the underlying concepts of the formal theory are presented in order to serve as a fundamental basis for an empirical study. In order to underline the theory with empirical evidence a sample of 335 hostile takeover bids launched in the timeframe form January 1, 2003 to December 31, 2008 has been analyzed. The key findings of the study are presented along two vital research questions reflecting the purpose of this thesis. 1