Learn the Defense Mechanisms
🧪 Poison Pill
- Allows shareholders to buy shares at a discount (excluding the hostile acquirer)
- Raises cost for acquirer; dilutes ownership
📌 Used by Twitter (2022): Adopted a poison pill to slow Elon Musk's hostile acquisition
📌 Considered by Whole Foods (2017): But not used as deal with Amazon was friendly
🤝 White Knight
- Target company finds a more favorable buyer to outbid hostile party
- Often preserves management and brand identity
📌 Whole Foods (2017): Amazon was seen as a white knight, blocking activist pressure from Jana Partners
🛡️ Crown Jewel Defense
- Company sells off its most valuable business lines to appear less attractive
📌 Not used by Twitter or Whole Foods
📌 Used by: Vulcan Materials (to block Martin Marietta, 2012)
🚫 Pac-Man Defense
- Target attempts to buy the acquirer
- Rare and requires large capital resources
📌 Not used in Twitter or Whole Foods cases
📌 Classic Case: Bendix vs. Martin Marietta (1982)
🏦 Golden Parachute
- Executives receive massive payouts if terminated post-acquisition
📌 Used by Twitter: Estimated $90M+ payout to Parag Agrawal and team after Musk's acquisition
📌 Used by Whole Foods: Executives received severance and bonus packages