Hostile takeover.
In plain English
A takeover turns hostile when a bidder pursues control after the target's board rejects or refuses to negotiate. The two main routes are a tender offer made straight to shareholders and a proxy fight to replace directors with people who will approve a deal. Boards defend with measures such as shareholder rights plans and staggered board terms, and state corporate law shapes what defenses are permitted. Hostile bids often end in a negotiated deal at a higher price. The label describes the board's position, not the merits of the offer.
01Why it matters
For shareholders a hostile bid is often the moment a stock's price gets tested against what a buyer will actually pay, and board defenses can block that test.
02The math, step by step
A bidder offers $60 for a stock trading at $45. The board rejects it as too low and adopts a rights plan. The bidder raises to $68 and takes the offer directly to shareholders, a 51 percent premium to where the stock started.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
An activist buys a stake and pushes for changes in strategy, capital returns, or board seats, usually without seeking to own the company. A hostile takeover seeks control outright. Activists sometimes prompt a sale, but the goal is different from the start.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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