bear hug. Slang. A (usu. hostile) takeover strategy in which the acquiring entity offers the target firm a price per share that is significantly higher than market value, intending to squeeze the target into accepting. reverse bear hug. A maneuver by which a takeover target responds to a bidder’s offer by showing a willingness to […]
scorched-earth defense. Corporations. An antitakeover tactic by which a target corporation sells its most valuable assets or divisions in order to reduce its value after acquisition and thus try to defeat a hostile bidder’s tender offer. Cf. CROWN-JEWEL DEFENSE; PAC-MAN DEFENSE.
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warehousing. 1. A mortgage banker’s holding of mortgages until the resale market improves. 2. A corporation’s giving of advance notice of a tender offer to institutional investors, who can then buy stock in the target company before public awareness of the takeover inflates the stock’s price. See TENDER OFFER.
share acquisition. The acquisition of a corporation by purchasing all or most of its outstanding shares directly from the shareholders; TAKEOVER. — Also termed share-acquisition transaction; stock acquisition; stock-acquisition transaction. Cf. ASSET ACQUISITION. [Cases: Corporations 197; Securities Regulation 52.10–52.50. C.J.S. Corporations §§ 373, 375–378; Securities Regulation §§ 121–141.]
director (di-rek-t[schwa]r). 1. One who manages, guides, or orders; a chief administrator. 2. A person appointed or elected to sit on a board that manages the affairs of a corporation or other organization by electing and exercising control over its officers. — Also termed trustee. See BOARD OF DIRECTORS . Cf. OFFICER(1). affiliated director. See
Recapitalization whereby the corporation substitutes debt for equity in the capital structure, usu. to make the corporation less attractive as a target for a hostile takeover. — Also termed leveraging up.
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arbitrage (ahr-b[schwa]-trahzh), n. The simultaneous buying and selling of identical securities in different markets, with the hope of profiting from the price difference in those markets. — Also termed space arbitrage. [Cases: Securities Regulation 53.17(4). C.J.S. Securities Regulation § 153.] — arbitrager (ahr-b[schwa]-trazh-[schwa]r), arbitrageur (ahr-b[schwa]-trah-zh[schwa]r), n. covered-interest arbitrage. The simultaneous investment in a currency and
The gradual purchase of a corporation’s stock at varying prices on the open market. • As a takeover method, a creeping acquisition does not involve a formal tender offer, although the SEC may classify it as such for regulatory purposes. — Also termed creeping tender offer.
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greenmail. 1. The act or practice of buying enough stock in a company to threaten a hostile takeover and then selling the stock back to the corporation at an inflated price. 2. The money paid for stock in the corporation’s buyback. Cf. BLACKMAIL(1); FEEMAIL; GRAYMAIL. 3. A shareholder’s act of filing or threatening to file