Premium Raid


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.

BREAKING DOWN '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.

  1. Takeover Artist

    An investor or company whose primary goal is to identify companies ...
  2. Corporate Raider

    An investor who buys a large number of shares in a corporation ...
  3. White Knight

    A white knight is an individual or company that acquires a corporation ...
  4. Greenmail

    An antitakeover measure that arises when a large block of stock ...
  5. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  6. Acquisition Premium

    The difference between the estimated real value of a company ...
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