Hostile Takeover

Definition - What does Hostile Takeover mean?

A hostile takeover is when one company attempts to gain control of another company by means of buying a large number of the company's shares. In order to complete the takeover, the acquiring company must purchase enough shares of the target company to become the controlling interest. The word "hostile" is used because these takeovers are frequently done either without notifying the target company's board of directors or after the board of directors has declined a purchase bid.

Justipedia explains Hostile Takeover

A hostile takeover is an aggressive business action. Hostile takeovers can occur when one company believes it can benefit from buying another company, and when that company is vulnerable to such a takeover. For example, two companies may be competitors in the tennis equipment business. If the larger of the two companies senses that the smaller one is becoming a threat to its market share, it may try a hostile takeover of the smaller one to eliminate the threat and to acquire the extra market share.

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