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. If a company undergoes an acquisition can an employee withdraw 401(k) funds tax free?

    Although the participant may be eligible to withdraw the funds if a plan is terminated as a result of an acquisition or other ...
  2. What is a tuck-in acquisition?

    A tuck-in acquisition, often referred to as a "bolt-on acquisition", is a type of acquisition in which the acquiring company ...
  3. A cash buyout agreement has been announced for a stock I own, but why isn't my stock ...

    The announcement of an acquisition or a merger does not necessarily mean that the deal will be resolved as originally stated. ...
  4. What was the most notable hostile takeover of all time?

    The drama of the RJR Nabisco takeover and wide coverage make it one of the most notable takeovers in history.
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 ...
Related Articles
  1. What Merger And Acquisition Firms Do
    Investing Basics

    What Merger And Acquisition Firms Do

  2. The Top Reasons Why M&A Deals Fail
    Investing

    The Top Reasons Why M&A Deals Fail

  3. Analysis of Companies with high goodwill
    Investing Basics

    Analysis of Companies with high goodwill

  4. How Mergers and Acquisitions Can Affect ...
    Investing Basics

    How Mergers and Acquisitions Can Affect ...

  5. The Biggest Mergers & Acquisitions In ...
    Investing Basics

    The Biggest Mergers & Acquisitions In ...

Trading Center