Wanna Argument?
What options exist for firms to use to fight against being taken over?
So, what can companies and boards do if the prospect of a takeover is less than welcome?
Methods of avoiding a takeover
Strategic action by the state:
- Golden share - a nominal share in a state-owned company, which is held by the government when the firm is privatised. The share may be kept for a period of time to allow the newly privatised firm to adjust to its new environment. The share could be held for longer if the firm is important to the national interest. The UK state held a golden share in BAA, the airports firm. Spanish firms have also had nominal shares held by their government.
- Changing the market structure by enforced mergers of domestic firms, as in the case of the French Government's intervention in France's energy industry
Tactical action by the state:
- Emergency decree, as in the action taken by the Spanish Government over power supplier Endesa
Tactical action by the firm:
- 'Poison pill' tactics where, for example, a firm takes on a large quantity of debt in order to burden a predator company if its takeover succeeded
- Trusting to luck, such as waiting to see if a 'white knight' company might arrive to make a friendly approach to take over the firm, at the expense of the predator company