Argo Vate/Hostil Takeover
ArgoVate/Hostile Takeover
Is this a hostile takeover?
A hostile takeover is described commonly as "acquiring a firm despite the disapproval of, or open resistance from, its board of directors. The acquirer ('raider') usually takes the takeover offer direct to the target firm's stockholders (shareholders) or seeks their approval to remove the obstructing board members." (Business Dictionary, 2013) In this case the takeover is definitely hostile because the AgroVate management does not think that the merger will result in overall betterment but that the employees and shareholders may be affected. On the other hand the purchasing company Bijoux wants to dismantle the current board and sell off AgroVate's widget finishing and the main business being service uniforms; there is no match or significant business advantage in the merger, which prima facie appears to be a hostile takeover.
Can the AgroVate board legally adopt defensive measures against Bijoux?
It is legal for a victim company of a takeover bid to defend itself. It is allowed under the Williams Act amendments to the Securities and Exchange Act of 1934. 2 That regulation is made to protect the share holders. Other than that, the victim company can devalue its shares and make...
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