hostile takeover
An acquisition attempt opposed by the target company's management, pursued directly through shareholders or a tender offer rather than board approval.
Example
“The board adopted a poison pill to defend against the hostile takeover bid from its largest competitor.”
Memory Tip
HOSTILE takeover = the company doesn't WANT to be bought. The acquirer goes around management.
Why It Matters
Understanding hostile takeovers matters because they can dramatically affect the value of your stock investments if you own shares in a company being targeted. These situations often create volatility in stock prices and can determine whether you gain or lose significant wealth depending on the outcome of the acquisition battle.
Common Misconception
Many people assume that hostile takeovers are illegal or inherently unethical, but they are actually legal business transactions in most countries. The term hostile simply means the target company opposes the deal, not that anything illegal or improper is occurring.
In Practice
In 2016, Microsoft attempted to acquire LinkedIn for 26.2 billion dollars. While this deal was ultimately accepted by LinkedIn shareholders, it faced resistance from some who felt the price was too low, demonstrating how hostile scenarios play out when one company pursues another despite management objections or shareholder hesitation about valuation.
Etymology
HOSTILE (opposed, unfriendly) TAKEOVER (acquisition of control). An acquisition done against management's WISHES.
Common Misspellings
Track markets & get real-time stock data
Related Terms
More in markets
Other markets terms you should know
See Also
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.