Hostile Takeover

Definition:

Generally, a Tender Offer by an outside bidder for a Target, the management of which is unwilling to negotiate a deal to be sold. In the United States, both US state and federal securities laws regulate Hostile Takeovers. State laws govern the validity of anti-takeover measures, such as Lockup Options and Poison Pills, while federal Tender Offer rules govern how third-party bidders may make a Hostile Takeover bid.

In the United Kingdom, a Hostile Takeover refers to an offer that is made against the wishes of the Target’s board of directors (so that they do not recommend that the Target’s shareholders accept the offer). Directive 2004/25/EC of the European Parliament and of the Council on Takeover Bids requires that all states in the European Economic Area (EEA) introduce certain rules that regulate the takeover of companies whose shares are admitted to trading on a EEA Regulated Market (see Main Market). The Directive was implemented in the United Kingdom through changes to the Companies Act 2006 and the Takeover Code.

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