Bear Hug Offer

Definition:

An offer by a company to buy another company at a price per share above the Fair Market Value of the shares. Typically, a company makes a Bear Hug Offer where the alternative would be to make a Hostile Takeover offer when it believes the Target’s management would otherwise decline the offer. Because management have a fiduciary responsibility to act in the best interest of shareholders, a Bear Hug Offer is essentially an offer management cannot refuse to consider, at least not without exposing itself to a lawsuit. Potential acquirers tend to make Bear Hug Offers publicly so the Target’s shareholders are aware of the offer. 

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