Chastity Bond

Filed Under » , ,
Dictionary Says

Definition of 'Chastity Bond'

A bond that matures immediately upon the completion of a trigger event such as a takeover or a change in control of the issuer. A chastity bond is one of a number of measures - many of which have equally colorful names - that are designed to prevent the hostile takeover of a company. The term is probably derived from the fact that its objective is to prevent unwarranted attention from unwelcome corporate suitors.
Investopedia Says

Investopedia explains 'Chastity Bond'

Chastity bonds are intended to dissuade hostile takeovers, based on the premise that if a large issue of these bonds mature and become payable upon completion of a takeover, the overall purchase price may become prohibitively expensive to the acquirer.

This anti-takeover measure is conceptually similar to another strategy known as the Macaroni Defense, in which a large issue of bonds must be redeemed upon a takeover or change of control, thereby expanding (like macaroni) the purchase price that the acquirer must pay. The only difference is that chastity bonds mature at par, whereas bonds issued in a Macaroni Defense are redeemable at a substantial premium.


Articles Of Interest

  1. 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. Trademarks Of A Takeover Target

    These tips can lead you to little companies with big prospects.
  3. Corporate Takeover Defense: A Shareholder's Perspective

    Find out the strategies corporations use to protect themselves from unwanted acquisitions.
  4. Bond Basics Tutorial

    Investing in bonds - What are they, and do they belong in your portfolio?
  5. The Basics Of Mergers And Acquisitions

    Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
  6. Valeant Eyes Bausch & Lomb

    Canadian pharmaceutical company Valeant has made a name for itself through acquisitions. On May 27 it announced that it was buying Bausch & Lomb for $8.7 billion making it a global leader in ...
  7. Sears' Losses Widen In Q1 - Time To Merge With JC Penney?

    Sears Holdings delivered another brutal quarter May 23. CEO and majority owner Edward Lampert has his hands full trying to revive a truly broken department store. Rumor has Neiman Marcus and ...
  8. Arbitrage Squeezes Profit From Market Inefficiency

    This influential strategy capitalizes on the relationship between price and liquidity.
  9. If Investors Won't Buy Retailers, Private Equity Will!

    Private equity seems to think the apparel retailing sector is on sale
  10. General Motors Hits $33: Where To From Here?

    While business seems reasonably strong in Detroit, there's no guarantee it will stay that way. Is GM a momentum play or should investors stay away. I'll answer both sides of this question.
comments powered by Disqus
Marketplace
Hot Definitions
  1. Yield Elbow

    The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.
  2. Xenocurrency

    A currency that trades in markets outside of its domestic borders.
  3. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.
  4. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.
  5. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.
  6. Samurai Bond

    A yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=357b0a50ed68ead07e3a2ea53cef8fd1