Premium Raid

AAA

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 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 TERMS
  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. Acquisition Premium

    The difference between the estimated real value of a company ...
  4. White Knight

    A white knight is an individual or company that acquires a corporation ...
  5. Hostile Takeover

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

    An antitakeover measure that arises when a large block of stock ...
Related Articles
  1. Investing

    What is the Pac-Man defense?

    The Pac-Man defense is a strategy in which a company that is facing a hostile takeover from another company essentially turns the tables and attempts to purchase the would-be buyer. The defensive ...
  2. Fundamental Analysis

    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.
  3. Options & Futures

    Bloodletting And Knights: Medieval Investment Terms

    From bloodletting to ye olde black knights, things on Wall Street are getting downright medieval!
  4. Mutual Funds & ETFs

    Corporate Takeover Defense: A Shareholder's Perspective

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

    What is a staggered board?

    A staggered board of directors (also known as a classified board) is a board that is made up of different classes of directors. Usually, there are three classes, with each class serving for a ...
  6. Stock Analysis

    Breaking Down the Halliburton Baker Hughes Deal

    Halliburton is using a downturn to get bigger and stronger in the long term, and the company is getting Baker Hughes at a reasonable price as a result.
  7. Brokers

    Key Differences Between M&A Advisors And Business Brokers

    For a buy, sale or partnership for one's business, one needs brokers and advisors to proceed ahead. Here are the key differences between business brokers and M&A advisors.
  8. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
    Professionals

    What is a SWOT Analysis?

    SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is a management tool used to identify strategies for success. It may be used to guide individual thinking, group ...
  9. Trading Strategies

    Selecting Mergers & Acquisitions Advisories For Small Businesses

    Mergers and acquisitions advisories aren't just for big players. Many advisory firms cater to small and medium businesses.
  10. Investing

    M&A Advisory Business Boutiques: How The Small Shops Are Capturing Large M&A Deals

    M&A advisory boutiques are becoming a big business, giving large investment banks a run for their money.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center