Friendly Takeover (Definition, Examples) | Friendly vs Hostile Takeover

Unlike a Friendly Takeover, In a Hostile takeover, the target company doesn’t want the acquirer to acquire it.

When the takeover is without the consent of the board of directors of the target company, it is hostile on the board of the directors of the target company; then, the takeover is called a “Hostile Takeover.”

In this type of takeover, the acquirer will directly go to the company's shareholders to acquire the shares of the target company without letting the management of the target company know about such actions.

An acquirer may proceed with the hostile takeover using any of the following strategies:

• Tender Offer: In a tender offer, the acquirer company makes a public offer to purchase shares from the target company's shareholders at a price more than the current market price.
• Proxy Fight: In proxy fights, the acquirer company makes the shareholders of the target company agree to use their proxy votes in a way that is in favor of the acquirer company so that they could make the desired changes in the target company in its management.

In the case of a hostile takeover, the target company can use several mechanisms to defend itself against a hostile takeover. This mechanism could be a poison pill, the crown jewel defense, Pac Man defense, etc.