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last activity : 09 02 2010 17:12:17 +0000
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Buy back some of your shares
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Number of options
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Poison Pill
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avoiding not possible
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Buying back some of your own shares is one way to avoid and be safe. This is a common defensive measure for both large and small corporations. Of course you'll need to have available capital. |
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Poison pill is something an unprofessional behaviour which spoils more reputation of the company if at all accepted by any senior responsible personality. the last & least way to avoid the acquiring process is to arrange as much as possible funds to buy back shares which can safe their position.
Buy back maximum number of shares in order to avoid hostile takeover from acquiring company. This is a tested formula. However, funds have to be arranged for this activity.
The most common method will be to buy back the shares and increase the holding percentage. This makes it difficult for the acquiring company.
Even if the company does not have sufficient money, a leveraged buyout (or LBO, or highly-leveraged transaction (HLT), or "bootstrap" transaction) can be undertaken when a financial sponsor acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage (borrowing).
This method will also offset and reduce the risk of a hostile takeover.......
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Poison pills, poison puts, buy back of shares etc can be used as defense against hostile taker. If the company is cash strained , it can also consider inviting a more friendly buyer to take over it- white knight. Even white squire is an option , where the investor is only interested in making a capital gain and not take over. Warren Buffet has acted as a white squire in number of situations. Aggressive options like pacman , crown jwels are also available, where the target try to buy the raider’s shares and planned value destruction is done, respectively |
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There is Pac man defense where you buy the shares of the acquiring company. You can even encourage your shareholders to buy the shares of the acquiring company at a discount or u can issue more shares to your present share holders at a discount say 30-50%.
Yeah there are number of options available for avoiding the hostile takeover from acquiring company. poison pills, buy back shares, poison puts are mainly used in India. and some other strategies are using by companies to avoid hostile takeover like Shark Repellants, Crown jewel and scorched earth etc.. In India, we replaced MRTP act with "Competition Commission" All M&A even hostile takeover come within the judicial scrutiny of competition commission if they tend to restrict competition & promote monopoly...
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Poison Pill is a strategy used by corporations to discourage hostile takeovers. With a poison pill, the target company attempts to make its stock less attractive to the acquirer. There are two types of poison pills:
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if the acquiring company is a dangerous shark no force in the world can stop the take over of ....a company !! |
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&&if the company being acquired shows attitude it will be smothered to dust & made lame and not fit to live again ...by the shark !!
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