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A takeover is a process wherein an acquirer takes over control of the target company. The acquirer may do so with or without the consent of the shareholders. Here are some of their defenses used in the U.S, Europe and India
Pac-man Defence
This strategy is commonly used to prevent a hostile takeover. Here the target company counters the takeover bid by trying to acquire the bidder’s company by making a counter offer to purchase the business of the acquiring company. This diverts the attention of the acquirer, who becomes busy in preventing the takeover of his own company. The hostile takeover attempt of Martin Marietta by Bendix Corporation in 1982 is a good example. In response to the takeover bid, Martin Marietta started buying Bendix stock with the aim of assuming control over the company. Bendix persuaded Allied Corporation to act as a “white knight”, and the company was sold to Allied Corporation the same year.

Killer Bees
Under this strategy, the target company employs firms or individuals to fend off a takeover bid. The target company wants to avert the takeover attempt and either is unstable to do this on its own or does not want to be seen doing so. Hence it employs other firms or individuals to do the job for it.
Leveraged Recapitalization
This is another strategy used to fend off hostile takeover. Here the company either borrows significant additional debts that facilitate repurchase of stocks through a buyback program, or distributes a liberal dividend among the current shareholders. This leads to a sharp increase in the share prices and makes the company a less attractive takeover target, for the acquirer has to pay more for the target company, thus minimizing the gains. This strategy is also a poison pill that serves two purpose – increasing the debt of the target making the acquisition costly and maintaining the shareholders interest in averting the takeover attempt.

Bank Mail
A bank mail defense strategy is one where the bank of the target firm refuses financing options to the firm that is keen on taking it over. This is done with the objective of preventing an acquisition and by doing the following:
• Depriving the merger through non availability of finance
• Increasing the transaction costs of the acquirer
• Delaying the takeover and permitting the target firm to develop other anti-takeover strategies
The acquiring firm may also try to keep other companies out of the fray. For example, Company A wanting to buy Company B may seek a guarantee from a bank that it will either finance Company A’s bid or no bid at all. Such a strategy can also be used to block other companies from the takeover fray.
Crown Jewel Defence
Crown jewel represents the most valuable unit or department of a company. These units are categorized as crown jewels based on their profitability, value of assets owned, and future growth prospects. As these are the most valuable parts of the company, they are often used as a takeover defense. Here the company creates anti-takeover clauses whereby it gets the right to sell off the crown jewels in the event of a hostile takeover. Such a clause obviously deters the acquirer from attempting the takeover of the firm.
In extreme cases, the company facing a threat of takeover may even sell off its most attractive assets to a friendly third party or spins off its valuable assets into a separate entity. As a result of such off-loading or spin off of valuable assets, the target company appears less attractive for the company planning a takeover which then loses interest and defers its takeover bids.

Sandbag happens when the target firm tends to defer the takeover or the acquisition with the hope that another firm, with better offers, may takeover instead. In other words, it is the process by which the target firm “kills time” while waiting for a more eligible firm to initiate the takeover.
It is a type of poison pill where the current shareholders of the target company are given the option to purchase discounted shares/stock after the potential takeover. The strategy involves giving a dividend in the form of rights, so that the existing shareholders can purchase equity or preference shares at a value lower than the prevailing market price. Once the takeover is complete, the current shareholders can flip-over the rights, allowing them to purchase the acquirer shares at a discount. This strategy results in dilution and price devaluation of the shares held by the acquirer, and defeats the very purpose of the takeover.
Grey knight
A grey knight is an informal and ambiguous intervener in the takeover battle that makes a counter bid for the shares of the target company. His bid causes confusion between the original acquirer and the target company, as the intensions behind the counter bid are not clear.
Lobster trap
It is an anti-takeover strategy whereby the target firm issues a charter preventing individuals with more than 10% ownership of convertible securities such as convertible bonds, convertible preference shares, and warrants from transferring these securities to voting stock. This charter becomes a barrier and hostile takeover becomes difficult. If the acquirer enters this trap, it becomes difficult to exit as the acquirer can neither acquire controlling stake in the business of the target, nor can it exit from the limited stake acquired. As a result he repents the decision of making a takeover attempt.
Shark Repellent/ Porcupine Defence or Provision
Shark repellant is another measure in the series of measures taken by a target company to fend off a hostile takeover attempt. In this case, the target company makes special amendments to its bylaws that become active only when a takeover attempt is announced. The objective of these special amendments is to make the takeover less interesting to the acquirer. Shark repellant is a repellant applied by deep sea divers to prevent sharks from attacking them. In a takeover situation, the acquirer is the shark and the proposed amendments repel the shark and prevent the attack. It is important to remember that such measures are not always in the best interest of the shareholders, as they may adversely affect the financial health of the company and result in deviating the attention of management from critical business objectives. There are instances when a target firm, which is being aimed at for a takeover, fights the same. The target firm may do so by adopting different means. Some of the ways include manipulating shares as well as stocks and their values. All these attempts of the target firm fighting its acquisition or takeover are known as shark repellent.

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