Thursday, January 15, 2015

Offense and Defense - The Evolution of Takeover Strategy and Defense

One of the hot topics of today's acquisition climate is the role of activists.  While activism has been a hot topic before the situation today is a  bit different, with many boards actively listening to activists.  It is another step in the give and take of corporate acquisitions between bidders and targets.  In fact, the recent history of acquisitions reveals the continually evolving offensive and defensive strategies.   Consider just a bit of the historical give and take (not in exact order but close):

  • Hostile takeovers were big in the 80's.  
  • Poison Pills are invented by Marty Lipton (Enstar 1982)
  • Acquiring firms started using junk bonds to finance deals.  Even large companies were vulnerable
  • States enacted anti-takeover statutes to slow down hostile deals.  
  • Courts strike down many of these statutes.
  • States revise anti-takeover statutes to be in conformity with the law 
  • Poison pills become a bit more popular
  • Poison pills are challenged in the courts (Household International)
  • Courts uphold poison pills (November 1985)
  • Poison Pills become widespread. 
  • Hostile deals decline
  • Shareholder activism picks up but doesn't capture great momentum (Mid - 90's)
  • Governance Scandals rock the corporate world (Enron, Worldcom)
  • Sarbanes Oxley is passed
  • Boards become independent in response to the law
  • Shareholder advisory services gain influence (Institutional Shareholder Services)
  • The financial crisis occurs
  • Dodd Frank is passed
  • Shareholder activism picks up speed - boards start to work with activists
Stay tuned.  It's a rapidly changing world.

All the best,


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