What is the Pac-Man defense?

By Bob Schneider AAA
A:

The Pac-Man defense is a strategy in which a company that is facing a hostile takeover from another company essentially turns the tables and attempts to purchase the would-be buyer. The defensive strategy gets it name from the popular arcade video game of the 1980s - Pac-Man. In the game, Pac-Man's initial goal is to evade the enemies chasing him. However, when Pac-Man consumes the "power pill", he is able to turn around and eat the enemies that once had been in pursuit of him.



In business, if Company A shakes off an acquisition attempt by Company B, Company B is said to be executing a Pac-Man defense if it then turns the tables and attempts a takeover of Company A.



For more on this topic, read Corporate Takeover Defense: A Shareholder's Perspective.



This question was answered by Bob Schneider.



RELATED FAQS

  1. What are some ways of financing an acquisition?

    Learn about how business acquisitions are financed, from using private equity funds to receiving huge acquisition loans from ...
  2. Why would a company want to do an acquisition of another company?

    Review some of the reasons why business acquisitions take place, and how the acquiring company is looking to benefit from ...
  3. What was the largest company Warren Buffett ever bought through Berkshire Hathaway?

    Explore Warren Buffet's rationale for the record setting Berkshire Hathaway acquisition of the Burlington Northern Santa ...
  4. What is the difference between a merger and an acquisition?

    Read about the legal and practical differences between a corporate merger and corporate acquisition, two terms often used ...
RELATED TERMS
  1. Asset Valuation Review (AVR)

    A process that establishes an estimate of the value of a failed ...
  2. Assisted Merger

    The merger of two or more financial institutions undertaken with ...
  3. Assuming Institution

    A healthy financial institution that purchases the assets of ...
  4. Acquisition

    A corporate action in which a company buys most, if not all, ...
  5. Roll-Up Merger

    A rollup (also known as a "roll up" or a "roll-up") ...
  6. Revlon Rule

    The legal requirement that a company’s board of directors make ...

You May Also Like

Related Articles
  1. Investing

    Facebook's Most Important Acquisitions

  2. Stock Analysis

    The Most Famous Leveraged Buyouts

  3. Stock Analysis

    Breaking Down the Halliburton Baker ...

  4. Chart Advisor

    The Best Way Into Big Pharma? See This ...

  5. Investing

    The Top Reasons Why M&A Deals Fail

Trading Center