In a proxy fight, however, the right of shareholders to vote on matters is assigned to another person i.e., a proxy. This gives the shareholders an incentive to sell their shares to the acquiring company. In a tender offer, the acquiring company makes an offer to buy the shares of the shareholders at a premium price i.e., a fixed price that is more than the current market price, within a particular window time. In order to pursue the transaction, the acquiring company can employ strategies like a tender offer or a proxy fight. Various reasons like killing competition, an undervalued target, et cetera, motivate a hostile takeover. Despite this disagreement, the acquiring company, by continuing to pursue the transaction makes it hostile. Contrary to such takeovers, there is disagreement on part of the management of the target company in the case of hostile takeovers i.e., the target company does not want to be acquired.

What is a Hostile Takeover?įriendly takeovers, that take place by mutual agreement of the target and acquiring company, after the overall assessment of the transaction, have been fairly predominant in the Indian M&A landscape. Furthermore, I also explain in detail the concept of hostile takeovers, its strategies, and defenses. In this article, I try to unpack this acquisition and the reasons for the acquisition turning hostile. Recently, in 2019, the Indian IT sector witnessed its first ever hostile takeover where Mindtree Limited (“Mindtree”), was acquired by Larsen and Toubro Limited (“L&T”). There are various defense strategies that can be employed by the target company like buyback, white knight, pacman, et cetera. In such a situation, instead of backing off, the acquiring company directly approaches the target company’s shareholders for the purpose of acquisition which either takes place through a tender offer or a proxy fight. A takeover becomes hostile when the acquisition of the target company is opposed by its management. Under Mergers and Acquisitions (“M&A”), the term takeover refers to the acquisition of one company by another. Hostile Takeovers under the Takeover Code, 2011.Defenses that can be employed by the Target Company.

Rationale of the Acquirer and the Target.Understanding the L&T and Mindtree Hostile Takeover.

Hostile Takeover by Lynessa Layne