White-Shoe Firm

M&A terms_metaphors

Poison Pill

What Does Poison Pill Mean?
A strategy used by corporations to discourage hostile takeovers. With a poison pill, the target company attempts to make its stock less attractive to the acquirer. There are two types of poison pills:

1. A "flip-in" allows existing shareholders (except the acquirer) to buy more shares at a discount.

2. A "flip-over" allows stockholders to buy the acquirer's shares at a discounted price after the merger.

Investopedia explains Poison Pill
1. By purchasing more shares cheaply (flip-in), investors get instant profits and, more importantly, they dilute the shares held by the acquirer. This makes the takeover attempt more difficult and more expensive.

2. An example of a flip-over is when shareholders gain the right to purchase the stock of the acquirer on a two-for-one basis in any subsequent merger.

Shark Repellent

What Does Shark Repellent Mean?
Slang term for any one of a number of measures taken by a company to fend off an unwanted or hostile takeover attempt. In many cases, a company will make special amendments to its charter or bylaws that become active only when a takeover attempt is announced or presented to shareholders with the goal of making the takeover less attractive or profitable to the acquisitive firm.

Also known as a "porcupine provision".

Investopedia explains Shark Repellent
Most companies want to decide their own fates in the marketplace, so when the sharks attack, shark repellent can send the predator off to look for a less feisty target.

While the concept is a noble one, many shark repellent measures are not in the best interests of shareholders, as the actions may damage the company's financial position and interfere with management's ability to focus on critical business objectives. Some examples of shark repellents are poison pills, scorched earth policies, golden parachutes and safe harbor strategies

Macaroni Defense

What Does Macaroni Defense Mean?
An approach taken by a company that does not want to be taken over. The company issues a large number of bonds with the condition they must be redeemed at a high price if the company is taken over.

Investopedia explains Macaroni Defense
Why is it called Macaroni Defense? Because if a company is in danger, the redemption price of the bonds expands like Macaroni in a pot!

Sandbag

What Does Sandbag Mean?
A stalling tactic used by management to deter a company that is showing interest in taking them over.

Investopedia explains Sandbag
The company stalls in hopes that a more favorable company will take them over.

Lobster Trap

What Does Lobster Trap Mean?
A strategy used by a target firm to prevent a hostile takeover. In a lobster trap, the company passes a provision preventing anyone with more than 10% ownership from converting convertible securities into voting stock.

Investopedia explains Lobster Trap
Examples of convertible securities include convertible bonds, convertible preferred stock, and warrants.

White-Shoe Firm

What Does White-Shoe Firm Mean?
A slang term for a broker-dealer firm that is strongly against hostile takeover practices.

Investopedia explains White-Shoe Firm
The white-shoe firm's name is derived from the white buck shoes that were a fashion requirement within elite social organizations in the 1950s.

Дата добавления: 2015-10-29