Asset or Liability Tactics - Hostile Takeover Defenses
Legal Lockups, Asset, Restructuring, and Litigation
Written by Jason Gordon
Updated at September 23rd, 2021
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Table of Contents
What are Asset and Liability Tactics as Defenses to Hostile Takeovers?What are Legal Lockups?What is Asset Restructuring?What is Litigation? Academic ResearchWhat are Asset and Liability Tactics as Defenses to Hostile Takeovers?
Examples of such tactics include Legal Lockups, Asset, Restructuring, and Engaging Litigation.
Next Article: Takeover Defense - Pac Man & White Knight Back to: CORPORATE GOVERNANCE
What are Legal Lockups?
The corporation may be able to halt or delay the acquisition by making it less lucrative to the acquirer or making it illegal under existing law.
What is Asset Restructuring?
The corporation may be able to acquire assets that the acquirer does not want or that will create antitrust problems. Alternatively, the corporation could sell valuable assets that the acquirer desires, thus making the acquisition less valuable.
Example: ABC Corp sells valuable assets to a friendly, third party. If the acquirer is doing so in hopes of creating value through a strategic acquisition of corporate assets, the sale of these assets may reduce the strategic value of the firm for the acquirer.
What is Litigation?
The corporation may seek a legal action through the FTC or SEC alleging that a merger or takeover violates antitrust or securities laws.
Example: ABC Corp purchases a competitor of the acquiring firm. If the acquirer effectively gains control over ABC Corp, the Federal Government may review the acquisition to make certain it does not violate antitrust law. If the acquisition results in a concentration of market power in the acquirer, the government may block the acquisition.
Related Concepts
- Hostile Takeover
- Power Struggles in Corporate Governance
- Tender Offer
- Proxy Contest
- White Knight and Pac Man Defenses
- Incentivizing Acquirer Defense
- Shark Repellant Defense
- Poison Pill Defense
- Gray Knight Defense
- Macaroni Defense
- Kamikaze Defense
- Jonestown Defense
