Hostile takeovers are high-risk event that could leave an indelible mark on corporate landscape. They involve a acquiring company attempting to take over the target firm against the wishes of the board and management. Hostile takeovers, despite their escalating drama and public nature are less common than they used to be.
During the 1980s, there were 160 hostile takeover bids that were not solicited and board members lived in fear of “corporate raiders” such as Carl Icahn. These incidents were widely reported, leading to lengthy and mudslinging discussions.
One notable example is the acquisition of Cadbury in 2009 by Kraft Foods Inc. It was the biggest hostile acquisition in history, and workers in the UK were outraged at the prospect of losing their jobs. Cadbury’s management rejected the offer, claiming it was an offer that was low-ball. Eventually, however, Kraft sweetened the offer and took over the confectionary giant.
Another notable instance is the purchase by KKR of Airgas in 2010. This was a hostile buyout of an industrial gas provider and was one of the largest leveraged buyouts of the time. The media frenzy grew and the deal ended up in a long legal dispute.
A more recent case is the acquisition of Twitter by Elon Musk in 2022. The hostile takeover required the use of a poison pill defence, which led to a turbulent negotiation and sweeping policy change post-acquisition. This was an example of an acquisition that was strategically planned and able to weather the hostile takeover battle showing how important it is for a target firm to have a properly-planned strategy to fight off unwanted offers.
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