Hostile Takeover
An acquisition attempt that proceeds without the approval or against the wishes of the target company's board of directors.
What is Hostile Takeover?
A hostile takeover occurs when an acquirer pursues a target company against the wishes of its board of directors. Because the board refuses to negotiate, the acquirer typically goes directly to shareholders via a tender offer or proxy fight. Common hostile takeover defenses include poison pills (shareholder rights plans that dilute the acquirer's stake), staggered boards that make replacing directors slow, and finding a white knight (a friendly alternative acquirer). Hostile takeovers are more common in the US and UK, where shareholder rights are stronger, than in Continental Europe or Japan. They became widespread during the 1980s leveraged buyout era and remain a mechanism for forcing underperforming management to change course.
Example
Kraft Heinz's 2017 bid for Unilever was a hostile takeover attempt. Kraft Heinz offered $143 billion, a premium of about 18%. Unilever's board immediately rejected the bid, and Kraft Heinz withdrew within days after facing resistance from Unilever management, shareholders, and regulatory scrutiny in Europe. The failed attempt prompted Unilever to restructure its portfolio and accelerate share buybacks to defend against future bids.
Source: SEC — Mergers and Acquisitions