Hostile Takeover And Poison Pill

Hostile take overs are when one company attempts to take over a company that doesn’t wished to be taken over, this is usually done by either the acquiring company attempting to buy out stakeholders or influence the management, or change, to get the deal approved.
This can cause many problems for the business, such as contrasting cultures in the business which could lead to an unsuccessful business with multiple goals and the two companies could be heading in opposite directions. Also by acquiring the business in this way there could be potential problems in the structure of the business, such as when Vodafone took over many companies and couldn’t successfully integrate the companies into one solid structure. When Kraft decided to take over
This is certainly one key reason that takeovers are likely to fail; one method they use is the Poison pill. This is when the board of directors sell more shares should one party gain too many shares, therefore devaluing the shares bought by the company trying to take over the over company. This was the case when Carl Icahn attempted to take over Netflix but the board of directors felt that this wasn’t for them and stated that should he buy more than 10% of stock they would float more stock to the market, he currently owns 9.75%. This would then cause the takeover bid to be much more expensive for the party attempting to do so and would hopefully put them off the idea of trying to gain complete control of the company. Another method used by companies to prevent hostile takeover is the Golden Parachute, this is when should the CEO lose his job due to takeover, there would have to be a large pay out, sometimes millions of pounds, hopefully to deter a hostile takeover, this was the case in the appointment of Charles C. Tillinghast Jr. to