In corporate strategy, what is a hostile takeover?
Answer
Acquisition opposed by the target’s management
In corporate strategy, a hostile takeover is an acquisition opposed by the target company’s management.
A bidder can pursue a hostile takeover through a tender offer made directly to shareholders or through a proxy fight seeking control of the board. The bidder may appeal to shareholders by offering a premium over the current market price. The target’s board can oppose the bid and adopt defensive measures, subject to applicable law and governance rules.
This differs from a negotiated or friendly acquisition, in which the target’s board supports the transaction. A hostile bid does not necessarily mean the deal is unlawful or that shareholders reject it. It describes the relationship between the bidder and the target’s leadership during the attempt to gain control.