A hostile takeover is an acquisition where the acquiring company gains control of a target company without the approval or consent of the target's board of directors or management.
Key Methods
Hostile takeovers typically occur through a tender offer, where the acquirer publicly offers to buy shares directly from shareholders at a premium above market price, or a proxy fight, where the acquirer persuades shareholders to vote out the current board. Less common tactics include a creeping tender offer, quietly buying shares on the open market to build a controlling stake.
Differences from Friendly Takeovers
Unlike friendly takeovers, which involve negotiated agreement between companies, hostile ones bypass management by appealing straight to shareholders after initial offers are rejected. This often leads to defensive strategies by the target, such as poison pills or white knights, to thwart the bid.
