Corporate Raider

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DEFINITION of 'Corporate Raider'

An investor who buys a large number of shares in a corporation whose assets appear to be undervalued. The large share purchase would give the corporate raider significant voting rights, which could then be used to push changes in the company's leadership and management. This would increase share value and thus generate a massive return for the raider.

INVESTOPEDIA EXPLAINS 'Corporate Raider'

Companies have used a variety of strategies to thwart the efforts of corporate raiders. These include shareholders' rights plans (poison pills), super-majority voting, staggered boards of directors, buybacks of shares from the raider at a premium price (greenmail), dramatic increases of the amount of debt on the company's balance sheet and strategic mergers with a "white knight."

Famous corporate raider Carl Icahn used tactics such as taking a company private, compelling a spin-off, calling for an entirely new board of directors or calling for a divestiture of assets to make a fortune with his hostile takeovers.

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RELATED FAQS
  1. How are corporate poison pills regulated in the United States?

    The Delaware Supreme Court was the first legal authority to declare poison pills a valid initiative. This defense is either ... Read Full Answer >>
  2. How can a company resist a hostile takeover?

    Several different defense strategies can be applied by existing corporate boards to ward off a hostile takeover. The most ... Read Full Answer >>
  3. How does additional equity financing affect existing shareholders?

    Additional equity financing dilutes existing shareholders. There are two types of candidates for equity financing. One is ... Read Full Answer >>
  4. How does a letter of intent work in the context of mergers and acquisitions?

    A letter of intent, or LOI, is used to set forth the terms of a proposed merger or acquisition. It is usually the first step ... Read Full Answer >>
  5. What happens to the shares of a company that has been the object of a hostile takeover?

    The shares of a company that is the object of a hostile takeover rise. When a group of investors believe management is not ... Read Full Answer >>
  6. What is the difference between a hostile takeover and a friendly takeover?

    A hostile takeover occurs when one corporation, the acquiring corporation, attempts to take over another corporation, the ... Read Full Answer >>
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