5 Examples Of Hostile Takeovers That Actually Worked

When you think of takeovers, you think of battles and breaking the trust of loyal employees and stakeholders. However, not all takeovers are scandalous. Hostile takeovers often fall into the latter category. When a company or an investor seeks to take over another company that doesn’t necessarily want to be taken over, this results in a hostile takeover. How? Hostile takeovers can happen if the acquirer has enough money or if the target company is listed on the stock exchange. Let’s see ‘5 Examples Of Hostile Takeovers’.

5 Examples Of Hostile Takeovers That Actually Worked

5 Examples Of Hostile Takeovers

The most common way for a hostile takeover to occur is through a tender offer where a bidder offers a shareholder a premium on the stock price. If a majority of the voting shareholders agree, then the company’s board and employees are left with no choice.   

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1. Oracle and Peoplesoft

In June of 2003, PeopleSoft announced a merger with J.D. Edwards. At full tilt with the news breaking out, Oracle hatched a hostile takeover venture of PeopleSoft.  Oracle’s bid brought with them a boundlessly grueling interrogation for the board of PeopleSoft, inquiries regarding whether PeopleSoft products would resume being supported and clients became hesitant to invest in the software. Consequently, managers were challenged with a verdict on how to counter the bid and the precariousness it caused. Henceforth, the Board had to contemplate the innuendos of a Customer Assurance Program for the prosperity of the business, its clients, and its obligations towards the shareholders all while tackling a tender offer.

2. Kraft Food and Cadbury

Back in 2010, the Chairman of Cadbury, Roger Carr, received a proposition worth $16.3 billion (740 pence) against his shares from Irene Rosenfield, the CEO of Kraft Food Industries Inc. The initial offer was outright rejected. Kraft proposed another bid shortly, for £10.1 billion ($17 billion). The offer was rejected on the grounds of being undervalued. Nelson Peltz, founder of Trian Fund Management, who until then retained shares in Cadbury after confabulations and arbitration with Kraft eventually pushed Cadbury to mislay its proprietorship in January 2010. Kraft ultimately succeeded in taking over Cadbury in a belligerent bid of $19.5 billion.

3. Sanofi Genzyme

Following the rancorous takeover clash in 2004, Aventis, the French Pharmaceutical distributor, concurred to being taken over by a small-scale competitor Sanofi-Synthelab. The deal was carried in cash and via stocks estimated at $65 billion. Back in the day, the integration gave rise to the world’s third-largest drug maker with a market valuation of no less than £90 billion preceded by Pfizer and GlaxoSmithKline. While that was under the rags, there was pressure on Sanofi-Synthelabo from the French govt. to increase foreseeing Aventis’ acceptance of a renewed offer.

4. InBev & Anheuser

With the summer sun setting in the US, an unforeseen bid to takeover Anheuser-Busch Co. was made by a Belgian-Brazillian brewer Inbev. The initial proposal of $65/share was refused by the board of Anheuser, citing undervaluation of its shares after anticipating that a better offer was unlikely, the Anheuser board voted to accept the deal of $70/share by the month of July. The $70 price, which was accepted in 2008, constituted a sizeable premium for the German shareholders.

5. Air Products and Airgas

In 2010, Air Products, the largest supplier of Hydrogen and Helium gas, sought to acquire Airgas, a domestic supplier, and distributor of medical and special gases. At the time Air Products owned a large amount of common stock in Airgas. In furtherance of its goal, Air Products proposed a $60 per share, all cash, structurally non-coercive, hostile tender offer which Airgas’ board rejected. Following the rejection, Air Products nominated 3 of its own independent directors ahead of Airgas’ Annual Meeting, resulting in a proxy contest between the two. Airgas used a poison pill to defend against Air Products’ hostile takeover bid.

In the following month, Air Products raised its offer to $65.50 per share but the board unanimously rejected it again. Finally, at the 2010 Annual Meeting, Airgas shareholders elected all 3 of Air Products’ director nominees to the board. Air Products then made a final offer of $70 per share which Airgas’ board rejected. Despite the board’s opinion, a majority of its shareholders wanted to approve the takeover and tender their shares. Subsequently, they sued the Board in the Delaware Court of Chancery, requiring Airgas to remove the poison pill.  

Conclusion

Today, hostile takeovers are rare due to stronger antitakeover laws adopted by many states. New federal laws also require more notice and fuller disclosures in proxy solicitations. However, hostile takeovers are not gone. The same management hubris that we saw in the past may launch future takeovers. Investors looking for extraordinary returns will continue to fund hostile takeovers. Finally, the global economy will witness cycles of growth and decline that will create new opportunities for hostile takeovers domestically and abroad. The global economy will create corporate losers and winners, opening doors to opportunists. 

5 Examples Of Hostile Takeovers That Actually Worked

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