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. How can a company resist a hostile takeover?

    Learn about some of the defense strategies a public company's board of directors might employ to prevent a hostile bidder ... Read Answer >>
  2. What is the difference between a poison pill defense and a suicide pill defense?

    Learn about different strategies a company uses to prevent hostile takeovers and the main difference between a poison pill ... Read Answer >>
  3. Under what circumstances might a company decide to do a hostile takeover?

    Learn about why companies use a hostile takeover to gain control of another company, and understand the different methods ... Read Answer >>
  4. What other sectors besides utilities are known as defensive?

    See why certain sectors, other than utilities, are considered defensive and therefore more resistant to the downturns of ... Read Answer >>
  5. Why is a shareholder rights plan called a "poison pill?"

    Discover why shareholder rights plans are often called "poison pills" to fight hostile takeovers and give smaller corporations ... Read Answer >>
  6. What happens to the shares of a company that has been the object of a hostile takeover?

    Learn about the effect on the share price of companies that are targets of hostile takeovers, which are tactics used by famed ... Read Answer >>
Related Articles
  1. Investing

    Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
  2. Investing

    A Trump Victory: How Defense Stocks Would Win (GD)

    A Trump White House's focus on bolstering America's defense could lead to tens of billions in added spending, bolstering defense stocks
  3. Investing

    Hostile Takeover

    A hostile takeovers is an unfriendly acquisition attempt by a company or raider that is strongly resisted by the management and the board of directors of the target firm. Learn more about the ...
  4. Investing

    Reverse Takeover

    Learn more about this type of takeover and how companies use it to avoid IPOs.
  5. Investing

    A Review Of Defense Stocks

    2010 could be a good year for defense stocks. Find out why.
  6. Investing

    The 3 Highest Yielding Defense Stocks

    Despite challenges, the largest defense firms will remain an integral part of the defense industry and possess yields that should appeal to investors.
  7. Investing

    Do Defensive ETFs Offer Value in Today's Market? (XLU, NEE)

    Discover why defensive ETFs are essential additions to equity portfolios, and learn about three defensive ETFs that combined to beat the S&P 500 over 10 years.
  8. Investing

    Top 3 Defense ETFs (PPA, XAR)

    Defense ETFs are likely to due well regardless of who wins the presidential election.
  9. Investing

    5 Best Defensive Mutual Funds for 2016

    Find out the best defensive mutual funds for providing your portfolio with downside protection during the next stock market decline.
  10. Investing

    Poison Pill

    A poison pill is a corporate maneuver put in place to try and prevent a hostile takeover. The target corporation uses this strategy to make its stock less attractive to the acquirer. This is ...
RELATED TERMS
  1. Pac-Man

    A high-risk hostile takeover defense in which the target firm ...
  2. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  3. Anti-Takeover Measure

    Measures taken on a continual or sporadic basis by a firm's management ...
  4. Killer Bees

    An individual or firm that helps a company fend off a takeover ...
  5. "Just Say No" Defense

    A strategy used by corporations to discourage hostile takeovers ...
  6. Suicide Pill

    A defensive strategy by which a target company engages in an ...
Hot Definitions
  1. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  2. Life Insurance

    A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the ...
  3. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center