When a company bid to a target company the following techniques use by Target Company to against their takeover bids.
Before the bid
- Effective communication with share holders
When a target company gets to know there are going to bid by other companies, the target company will start the effective communicational with shareholder to not to sell their shares to others.
- Poison Pills
This is where the target company issues bonds or preference shares which can be convert as an ordinary share at the takeover points. This technique is use to threat the bidder to spend much more for acquiring the target company.
- Shark repellent super majority
This is usually happen to the target companies. This is where change articles of association to very high percentage of shares approve an acquisition or merger.
Convert the 80% of share approvals to acquisition or merger.
- High assets value
Revalue the fixed assets value and show the companies true value to the acquirer.
After the bid
- Rejection letter
When a target company received the bidders offer document, the target company must reply to the share holders within 14 days. The letter should Constant the position of the organisation and what are they going to do feather.
- Profit forecast
The target explains their profit forecast to the stakeholders and says their expected returns in future as this.
This forecast should be a viable and achievable to the company, if not its create the company value feather less than now.
- Attacking to bidder
This is where typically evaluate the bidder’s strategies and the financial source and attack back to the bidder.
- White Knight
Bring a favourable investor or a partner to counter bid to the original acquiring company.
- Regulatory protections
This is where the target company seeks the government intervention to the takeover bid and announce as takeover is not possible due public interest.
- Advertising campaigns
Create a high level of advertising against to takeover bid and use that advertisement to show their power to all stakeholders.