"Just Say No" Defense

DEFINITION of '"Just Say No" Defense'

A strategy used by corporations to discourage hostile takeovers in which board members reject a takeover bid outright. The legality of a just say no defense may depend on whether the target company has a long-term strategy that it is pursuing, which can include a merger with a firm other than the one making the takeover bid, or if the takeover bid simply undervalues the company.

BREAKING DOWN '"Just Say No" Defense'

A just say no defense isn't necessarily in the best interest of shareholders, since board members can employ it even if an offer is made at a significant premium to the current share price.


The case of Paramount Communications vs. Time, Inc. helped establish the just say no defense as a viable anti-takeover strategy. In the case, Time, Inc. was set to merge with Warner Communications, but received a bid from Paramount that its board rejected because there was a long-term plan.

RELATED TERMS
  1. Takeover Bid

    A type of corporate action in which an acquiring company makes ...
  2. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  3. Killer Bees

    An individual or firm that helps a company fend off a takeover ...
  4. Hostile Bid

    A specific type of takeover bid that is presented directly to ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for ...
  6. Whitemail

    A strategy that a takeover target uses to try and thwart an undesired ...
Related Articles
  1. Investing

    Warding Off Hostile Takeovers

    The purpose of this article is to provide a general overview of hostile corporate takeovers, while highlighting a general course of action against such activity. This article provides basic information ...
  2. Investing

    What is a Takeover?

    A takeover happens when one company makes a bid to acquire a target company.
  3. Trading

    Pinpoint Takeovers First

    Use these seven steps to discover a takeover before the rest of the market catches on.
  4. Investing

    Reverse Takeover

    Learn more about this type of takeover and how companies use it to avoid IPOs.
  5. ETFs & Mutual Funds

    Corporate Takeover Defense: A Shareholder's Perspective

    Find out the strategies corporations use to protect themselves from unwanted acquisitions.
  6. Investing

    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.
  7. Investing

    How To Profit From Mergers And Acquisitions Through Arbitrage

    Making a windfall from a stock that attracts a takeover bid is an alluring proposition. But be warned – benefiting from m&a is easier said than done.
  8. Markets

    Trademarks Of A Takeover Target

    These tips can lead you to little companies with big prospects.
  9. Investing

    Poison Pill

    A poison pill is a corporate maneuver put in place to try and prevent a hostile takeover. The target corporation uses this strategy to make its stock less attractive to the acquirer. This is ...
  10. Trading

    Trade Takeover Stocks With Merger Arbitrage

    This high-risk strategy attempts to profit from price discrepancies that arise during acquisitions.
RELATED FAQS
  1. Under what circumstances might a company decide to do a hostile takeover?

    Learn about why companies use a hostile takeover to gain control of another company, and understand the different methods ... Read Answer >>
  2. What happens to the shares of a company that has been the object of a hostile takeover?

    Learn about the effect on the share price of companies that are targets of hostile takeovers, which are tactics used by famed ... Read Answer >>
  3. What is the difference between an acquisition and a takeover?

    There is no tangible difference between an acquisition and a takeover; both words can be used interchangeably - the only ... Read Answer >>
  4. How can a company resist a hostile takeover?

    Learn about some of the defense strategies a public company's board of directors might employ to prevent a hostile bidder ... Read Answer >>
  5. What is the difference between a hostile takeover and a friendly takeover?

    Learn about the difference between a hostile takeover and a friendly takeover, and understand how proxy fights and tender ... Read Answer >>
  6. What's the difference between a merger and a hostile takeover?

    Understand the difference between a merger and a hostile takeover, including the different ways one company can acquire another, ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center