Across the world there is a fear/resistance for takeovers briefly discuss on pre-takeover and post-takeover defence strategies.

Takeovers often face resistance from target companies. These companies employ various defence strategies, categorized into pre-takeover and post-takeover, to deter or mitigate hostile bids. Pre-takeover Defence Strategies: These strategies are implemented before a hostile bid is made, making the target less attractive or more difficult to acquire. Poison Pills: This is a legal device that makes it prohibitively costlier for an acquirer to take control without the target board's approval. Most poison pills allow existing shareholders (excluding the acquirer) to purchase additional shares at a substantial discount once a certain ownership threshold (e.g., 10%) is crossed. This dilutes the acquirer's stake and increases the cost of acquisition. There are two main types: 'Flip-in' pill: Allows target shareholders to buy more target shares at a discount. 'Flip-over' pill: Allows target shareholders to buy acquirer shares at a discount after the merger. Poison Puts: In this strategy, bondholders of the target company gain the right to 'put' (sell) their bonds back to the company at a pre-specified redemption price upon a hostile takeover. This creates an immediate cash drain for the acquirer, forcing them to refinance the target's debt and increasing the cost of acquisition. Restricted Voting Rights: Some target companies restrict the voting rights of shareholders who acquire a large chunk of shares (e.g., exceeding a threshold percentage). This prevents the acquirer from exercising control despite holding a significant stake, making the acquisition less appealing. Golden Parachutes: These are lucrative compensation agreements for senior management, guaranteeing hefty cash settlements if they leave the company following a change in control. While primarily for executive retention, they can also serve as a deterrent by increasing the cost of acquisition for the bidder. Post-takeover Defence Strategies: These strategies are employed after a hostile bid has been initiated. Share Repurchase: The target company initiates a cash tender offer to buy back its own outstanding shares. This increases the cost for the acquirer, as they would need to raise their bid to remain competitive, potentially deterring the takeover. Leveraged Buy Out (LBO): The target's management partners with a private equity firm to buy out all public shares, converting the company into a private entity. The purchase is largely financed by debt ('leveraged'). This strategy allows the target to defend against a hostile bid by offering shareholders a price greater than the hostile bidder's offer. Pac Man Defence: This is a rare and aggressive strategy where the target company makes a counter-offer to acquire the hostile bidder. It is typically difficult for a smaller target company to acquire a larger bidder. White Knight Defence: In this scenario, the target company's management seeks a friendly third party ('White Knight') to purchase the company instead of the hostile bidder. This is often considered a better outcome for target shareholders if the 'White Knight' offers a higher price or a more strategically aligned future for the company.