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 do companies use the Pac-Man defense?

    To employ the Pac-Man defense, a company will scare off another company that had tried to acquire it by purchasing large ... Read Answer >>
  2. 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 >>
  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 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 >>
  5. Why is buying a utility stock known as defensive move?

    Utility stocks are known as defensive stocks for investors due to the fact that consumer demand will remain high even when ... 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

    Corporate Takeover Defense: A Shareholder's Perspective

    Find out the strategies corporations use to protect themselves from unwanted acquisitions.
  2. Insights

    Facebook Messenger Adds More Gaming Features (FB)

    Users can play games like PAC-MAN, SPACE INVADERS, and more within Facebook's Messenger app.
  3. Investing

    Guard Your Portfolio With Defensive Stocks

    Find out how these securities can protect you from a market bust.
  4. Investing

    What Will Trump's Defense Boost Do For Stocks?

    President Trump will seek to increase defense spending by 10% for the 2018 proposed budget. How could this affect defense stocks?
  5. 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
  6. Investing

    Pinpoint Takeovers First

    Use these seven steps to discover a takeover before the rest of the market catches on.
  7. 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 ...
  8. Investing

    A Review Of Defense Stocks

    2010 could be a good year for defense stocks. Find out why.
  9. Tech

    How To Game The Video Game Industry

    Investopedia explores the business, current developments, future trends of video games industry and how the overall industry makes money.
  10. Small Business

    5 Big Companies' Biggest Blunders

    These companies were once at the top of their leagues, but have since fallen to near-obscurity.
RELATED TERMS
  1. Pac-Man

    A high-risk hostile takeover defense in which the target firm ...
  2. Pac-Man Defense

    A defensive tactic used by a targeted firm in a hostile takeover ...
  3. Anti-Takeover Measure

    Measures taken on a continual or sporadic basis by a firm's management ...
  4. "Just Say No" Defense

    A strategy used by corporations to discourage hostile takeovers ...
  5. Leveraged Recapitalization

    A corporate strategy in which a company takes on significant ...
  6. Suicide Pill

    A defensive strategy by which a target company engages in an ...
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  3. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  4. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  5. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  6. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
Trading Center