Common Takeover Defenses
This chapter deals with takeover defenses. Takeover defenses are impediments to potential bidders and are designed either to slow own an unwanted offer or force a suitor to raise the bid to get the target's board to rescind the defense. Takeover defenses are designed either to slow the takeover process and give the target firm a chance to strengthen its existing defense or put new ones in place, or raise the total cost to the acquirers of taking over the target. The best defense against unwanted suitors may be advance planning and a strong financial performance. Large public companies routinely review their takeover defenses. Many companies have “stock watch” programs in place at are intended to identify stock accumulations, or stock price movements at reflect an impending takeover attempt. Such programs track trading patterns in a company's stock. Companies require their stock transfer agent to provide up-to-date and accurate stock transfer sheets and to report any unusual movements in stock transfer activity. Stock watch programs routinely review securities and exchange commission (SEC) records for any Schedule 13D filings, which are required when a firm buys more an 5 percent of another firm's stock.