Definition of Incentivizing Acquirer Defense
What is an Incentivizing Acquirer Defense
Sometimes the target company will attempt to provide an offer or incentive to the acquirer that will provide enough benefit that they give up on its efforts. These efforts are generally not in the best interest of existing shareholders and can lead to litigation.
Here are a few inducements that a target company could choose to offer an acquirer.
In greenmail, the target company will attempt to repurchase the block of shares held by the acquirer, who will profit from the repurchase. They will also agree to stop pursuing the target company, which effectively eliminates the acquisition plan.
In a standstill agreement, the board may offer to pay an acquirer to halt their purchase of additional shares for a stated period of time. The provision may also require the acquirer to vote its shares for the current board of directors. This will give the target company time to implement additional anti-takeover measures.
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