DEFINITION of 'Godfather Offer'
An irrefutable takeover offer made to a target company by an acquiring company. Typically, the acquisition price's premium is extemely generous compared to the prevailing market price. Therefore, if the target company's management refuses the offer, shareholders may initiate lawsuits or other forms of revolt against the target company for not performing their fidiciary duty of looking out for the best interests of the shareholders.
BREAKING DOWN 'Godfather Offer'
The offer is even harder for the target company's management to refuse when its stock price has been flat or declining for an extended period of time, as long-time investors would jump at the opportunity to cash out at an elevated price.
Similar to the famous Godfather in the trilogy of movies, the bidding company is essentially making an offer the target company cannot afford to refuse.