Fat Man Strategy

AAA

DEFINITION of 'Fat Man Strategy '

A takeover defense tactic that involves the acquisition of a business or assets by a target company. The strategy is based on the premise that the bulked-up company - the "fat man" - would have reduced appeal to a hostile bidder, especially if the acquisition increases the acquirer's debt load or decreases available cash.

INVESTOPEDIA EXPLAINS 'Fat Man Strategy '

This is a type of "kamikaze" defense tactic, which inflicts potentially irreversible damage on a company to prevent it from falling into hostile hands. However, it involves adding assets rather than divesting them as is the case with other kamikaze defense strategies. A disadvantage of this tactic is that acquisition candidates need to be identified well in advance of a hostile bid, otherwise there may be insufficient time to complete a fat man transaction.

RELATED TERMS
  1. Sale Of Crown Jewels

    A takeover-defense tactic that involves the sale of the target ...
  2. Kamikaze Defense

    A type of takeover defense mechanism sometimes resorted to by ...
  3. Flip-Over Pill

    A type of poison pill strategy in which shareholders have the ...
  4. Corporate Raider

    An investor who buys a large number of shares in a corporation ...
  5. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  6. Black Knight

    A company that makes a hostile takeover offer for a target company. ...
Related Articles
  1. The Merger - What To Do When Companies ...
    Investing Basics

    The Merger - What To Do When Companies ...

  2. Pinpoint Takeovers First
    Options & Futures

    Pinpoint Takeovers First

  3. Corporate Takeover Defense: A Shareholder's ...
    Mutual Funds & ETFs

    Corporate Takeover Defense: A Shareholder's ...

  4. Trade Takeover Stocks With Merger Arbitrage
    Active Trading Fundamentals

    Trade Takeover Stocks With Merger Arbitrage

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center