Kamikaze defense

Kamikaze defense,

Definition of Kamikaze defense:

  1. A company that does not want to fall into enemy hands may as a last resort try a kamikaze defense. Normally, in an intended acquisition process, an interested party will build up a small stake in the target company and approach the Board of Directors with an offer to buy the company. If the board rebuffs the offer, which would invariably be the case if the board and its financial advisors believed that the offer "substantially unvalued" (common M&A-speak) the company, the interested party could assume a more aggressive stance to take over the company. If the would-be acquirer feels like it is getting nowhere with more pressing negotiations, it may go hostile with a tender offer (to circumvent the intransigent board) or launch a proxy battle for control of the company.

  2. Kamikaze defense is a type of takeover defense mechanism sometimes resorted to by a company to avoid being taken over. Not so drastic as ending its corporate life, a kamikaze defense nevertheless involves inflicting self-harm, or taking measures that are detrimental to business operations or financial condition to reduce its attractiveness to a hostile bidder. A kamikaze defense is desperate but the hope is that the takeover bid will be thwarted. .

  3. A takeover defense strategy used by companies to prevent hostile takeovers by other companies or corporate raiders. This can involve tactics such as selling off substantial assets, acquiring unattractive assets, increasing debt load or decreasing available cash to make the company less attractive to takeover. There are many variations of particular kamikaze defenses strategies such as the scorched earth tactic, sale of crown jewels strategy, or fatman strategy. It is named after the tactics employed by Japanese suicide pilots in World War Two.

Meaning of Kamikaze defense & Kamikaze defense Definition