Corporate Instruments to Fend Off Unwanted Shareholders

Seminar paper from the year 2008 in the subject Business economics - Business Management, Corporate Governance, grade: 1,0, University of Applied Sciences Essen, course: International Management, language: English, abstract: As markets today mostly develop and change faster than companies can grow, the option of taking over other companies has become core to strategic management seeking to expand the company's business and to create value for both customers and stakeholders. Hence M & A activities have significantly increased in today's business world of fast changing global economies and emerging competition. This development forces prospective target companies to take action to protect themselves against hostile takeovers.

In order to determine effective defence strategies and to apply appropriate anti-takeover instruments, many aspects such as motives and practical approach of the attacking company as well as a variety of legal frameworks and shareholder interests have to be reviewed diligently.

This paper delivers a concentrated overview of the topic's most important aspects and delineates some of the most common instruments to fend off unwanted shareholders. Particular attention is thereby payed to these instruments' impact on stock prices of both the attacking and the target company.

The authors hereunto present and interpret a significant amount of empirical evidence taken from real business cases where the previously discussed defence instruments were actually applied.