Why do mature companies so often become the targets for hostile takeovers?
Why do mature companies so often become the targets for hostile takeovers?
Homework Answers
A hostile takeover refers to acquisition of one company by another by directly buying shares from the shareholders or replacing management to approve the takeover. The mature companies have reached a certain size and they are not expected to grow much in future. Due to this it is easier to convince the shareholders to sell their shares. Also mature firms have a lower share price and hence they are targeted for the takeovers.
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Why do mature companies so often become the targets for hostile
takeovers?
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Firms facing hostile takeovers often take actions to forestall the acquisition. For instance, a firm could seek help from another company to become a friendly acquirer of a target firm and protect itself from a hostile takeover. Such tactics are referred to as Denton Manufacturing has made a tender offer for Hynde Industries. Both companies are relatively large firms in the automobile parts industry. Which of the following likely would be the most effective defense tactic for Hynde to take...
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