Dinesh open such a type of thread a couple of days ago… Let’s see if we can get this rolling for takeover defense mechanisms - drop in an one liner! (some of them are self-explanatory, I know.) pre offer: poison pill: poison put: staggered board of directors: restricted voting rights: super majority voting provisions: fair price amendments: golden parachutes: post offer: just say no: ligitation: greenmail: share repurchase: leveraged recapitalization: crown jewel defense: pac man defense: white knight defense: white squire defense:
yup
pre offer: poison pill: Gives target’s shareholds the ability to purchase shares at a discount, harder to then buy target poison put: Target’s bondholders have the right to redeem debt at time of takeover staggered board of directors: Harder to replace the board with one that is friendly to the aquirer restricted voting rights: any shareholder over a certain amount (10%) loses voting rights super majority voting provisions: More than a simple majority needed for takeover approval (eg. 75%) fair price amendments: ??? golden parachutes: Pay off existing managment that will be laid off. How this is a defense mech I don’t know post offer: just say no: Eh…say no. ligitation: Slow it down using the courts greenmail: Pay off the aquirer with a deal that they can’t come back w/in a certain timeframe share repurchase: Target buys back own shares to dilute the ownership of the aquirer? leveraged recapitalization: Lever up to make target look bad crown jewel defense: Sell off your best division pac man defense: Fight back and go after the aquirer white knight defense: Third party steps in with a better deal white squire defense: Third party steps in a buys a bunch of shares
Thanks barthezz - this thread is going to be a point saver for all of us. Keep it going guys, I have nothing to share here, as I don’t remember anything now.
dinesh.sundrani Wrote: ------------------------------------------------------- > Thanks barthezz - this thread is going to be a > point saver for all of us. Keep it going guys, I > have nothing to share here, as I don’t remember > anything now. I have to agree with Dinesh here. THe first thing I thought of as a Takeover Defense Mechanism is the crash and burn defensive mechanism my body instigates after studying too much and drinking too much coffee.
jalmy8 - The main issue with me here is that I had a good hold of all this. But now because of a huge study gap, I can hardly remember anything now. When I try to do revision, I find it all new. For Ex in Corp Finance, I was looking at Replacement projects and I had to go throught that text all over again to strike back the lost memory. And with just 9 days left and considering the brutality at work, I just hope I make it. This is the 1st exam in my life where I am so underprepared and the smell of failure is shivering my body, but then there is always a first time to everything. If the FAIL comes in, I will accept it happily.
golden parachutes: Pay off existing managment that will be laid off. How this is a defense mech I don’t know I guess … the acquirer will need to pay off the existing mgmt of the target that will be out of job now due to the acquisition, which will increase its (acquirer’s) cost burden and ward off the deal.
dinesh.sundrani Wrote: ------------------------------------------------------- > jalmy8 - The main issue with me here is that I had > a good hold of all this. But now because of a huge > study gap, I can hardly remember anything now. > When I try to do revision, I find it all new. For > Ex in Corp Finance, I was looking at Replacement > projects and I had to go throught that text all > over again to strike back the lost memory. And > with just 9 days left and considering the > brutality at work, I just hope I make it. This is > the 1st exam in my life where I am so > underprepared and the smell of failure is > shivering my body, but then there is always a > first time to everything. If the FAIL comes in, I > will accept it happily. Great outlook Dinesh… I’m in the same leaky boat… just grab that bucket and pour that water back in…? Ha though I had something there-it’s late.
yea elparko - But 9 days are not less, in any sense to turn the boat in to (speeder) cruise to caribbean… See you there after the exam. 
Know what Mwvt9 posted - the meaning of things. Then it’s easy to distinguish pre- from post offer mechanisms. And you’ll be able to apply it correctly too.
for completion (don’t know if that is still a method tough, since it is not in the CFA books): Employee Stock ownership plans (ESOP): A large block of stock in an ESOP (either existing or recently created) is likely to vote in support of management positions and therefore make an unwanted takeover more difficult.
adding to mwvt9’s list: Golden parachute: Golden parachutes are large payments to specified current managers; such payments are triggered only by the purchase of the firm, thereby materially increasing the acquisition expense to the buyer and reducing the likelihood of an unwanted takeover.