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What hostile takeovers are (and why they’re usually doomed)


Thanks to the machinations of a certain billionaire, the phrase “hostile takeover” has been liberally bandied about the media sphere recently. But while it long ago entered the mainstream lexicon, “hostile takeover” carries with it an air of vagueness — and legalese opacity.
At a high level, a hostile takeover occurs when a company — or a person — attempts to take over another company against the wishes of the target company’s management. That’s the “hostile” aspect of a hostile takeover — merging with or acquiring a company without the consent of that company’s board of directors.
How it usually goes down is, a company — let’s call it “Company A” — submits a bid offer to purchase a second company (“Company B”) for a (reasonable) rate. Company B’s board of directors rejects the offer, determining it to not be in the best interest of shareholders. But Company A attempts to force the deal, opting for one of several strategies: A proxy vote, …

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