Premium Raid

Filed Under »
Dictionary Says

Definition of 'Premium Raid'

An attempt by a corporate raider or acquiring company to procure a large block of shares in a target company, by offering its shareholders a significant premium over the current market value of their shares. This tactic is most likely to be used in a hostile takeover situation, where the acquiring company prefers to bypass the target company's management and  take its offer directly to the shareholders.

Investopedia Says

Investopedia explains 'Premium Raid'

The ultimate objective of a premium raid for a corporate raider or acquirer is to gain effective control of the target company. In certain cases, a premium raid can prove to be quite costly for the acquiring company. This may occur if the premium offered to the target company's shareholders is too high (a situation that may arise if the target is in a hot sector), or if the acquirer is forced into a bidding war with another bidder or a white knight who has the support of the target company's management.

Related Definitions

Search results for

'Premium Raid'

  • Mergers And Acquisitions: Understanding Takeovers

    http://www.investopedia.com/articles/01/050901.asp
    ... During a dawn raid, a firm or investor aims to buy a substantial holding ... forces the
    target company to repurchase the stock at a substantial premium to destroy ...

  • Corporate Kleptocracy At RJR Nabisco

    http://www.investopedia.com/articles/stocks/09/corporate-kleptocracy-rjr-nabisco.asp
    ... Wilson had to pay a high premium for Nabisco, and Johnson pushed through demands ...
    Begins and Ends With RJR Nabisco, Johnson had a much bigger larder to raid. ...

Related Articles

Partner Links