Hostile Bid


DEFINITION of 'Hostile Bid'

A specific type of takeover bid that is presented directly to the target firm's shareholders because the target's management is not in favor of the deal. A hostile bid is usually presented through a tender offer, under which the acquiring company offers to purchase the common shares of the target at a substantial premium. Simply put, a hostile bid is the bid offered in a hostile takeover.


Hostile bids can mean major changes for the organizational structure. Despite target management objections, shareholders face a situation similar to a prisoners' dilemma, where only those that accept the tender are guaranteed to enjoy the premium price. If the board pursues defensive action to stop the merger, a proxy fight can occur where the acquirer will often attempt to convince the target shareholders to replace management.

  1. Creeping Tender Offer

    A takeover strategy involving the gradual acquisition of the ...
  2. Game Theory

    A model of optimality taking into consideration not only benefits ...
  3. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  4. Poison Pill

    A strategy used by corporations to discourage hostile takeovers. ...
  5. Proxy

    1. An agent legally authorized to act on behalf of another party. ...
  6. Tender Offer

    An offer to purchase some or all of shareholders' shares in a ...
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