Shotgun Wedding

DEFINITION of 'Shotgun Wedding'

A forced union of two companies or two jurisdictions that otherwise would not choose to merge. A government can force a shotgun wedding between two companies to prevent a shock to the economy, or between two cities or counties to prevent a local government from going bankrupt. While a shotgun wedding may not be pleasant for the parties involved, the resulting union is intended to serve the greater good.

BREAKING DOWN 'Shotgun Wedding'

In 2008, the U.S. government forced Bank of America to merge with Merrill Lynch to prevent the economy from declining further than it already had, as a result of the global financial crisis and the collapse of Lehman Brothers. BofA paid $29 per share for Merrill’s stock, which was trading around $17. The merger created the largest mortgage lender, retail brokerage, retail bank and credit card company in the United States.

Similarly, in 2012, new regulations from the Spanish government caused two of the nation’s banks, CaixaBank and Banca Civica, to merge in order to meet increased capital requirements amid investors’ concerns about toxic assets on banks’ balance sheets. The merger gave CaixaBank control of a significant percentage of Spain’s deposits, customer loans and total assets. 

In 2013, there was talk of merging Detroit, MI and Wayne County. Wayne County, despite a history of severe corruption, was more financially stable than neighboring Detroit. The idea behind the shotgun wedding was to rescue Detroit from its massive debts and imminent bankruptcy.

2013 also saw hints of a shotgun wedding between luxury department stores Saks Fifth Avenue and Neiman Marcus. Private-equity firm KKR wanted to force this merger, which would have created the U.S.’s second-largest luxury department store chain at a time when luxury companies were still struggling in the aftermath of the Great Recession. Ultimately, the deal did not happen, and Saks, the parent company of Saks Fifth Avenue, was acquired by Hudson's Bay Company in July 2013. 

RELATED TERMS
  1. ABCD Counties

    Categories of U.S. counties devised by AC Nielsen Company that ...
  2. Vertical Merger

    A merger between two companies producing different goods or services ...
  3. Shotgun Clause

    A buy-sell provision used by related parties in a business venture ...
  4. Exchange Ratio

    The relative number of new shares that will be given to existing ...
  5. Horizontal Merger

    A merger occurring between companies in the same industry. Horizontal ...
  6. Assisted Merger

    The merger of two or more financial institutions undertaken with ...
Related Articles
  1. Budgeting

    Say "I Do" To A Recession Wedding

    Everyone has felt the pinch in these tough economic times, but your wedding can still be everything you want without breaking the bank.
  2. Personal Finance

    Top 5 Most Expensive Celebrity Weddings

    While you may not have the funds to be as lavish as these weddings, they may give you some inspiration for your own.
  3. Stock Analysis

    3 Reasons Saks Makes Sense

    Sak's stock is priced to move.
  4. Budgeting

    Have A Charming (And Cheap) Wedding

    Learn how to have the wedding you've always wanted ... without going broke.
  5. Personal Finance

    When Taking Vows, Vow To Spend Less

    When we first went steady, it didin't matter that we had no money and weren't be able to support ourselves as newlyweds.
  6. Personal Finance

    5 Tips For Saving Money On Wedding Gifts

    Check out these practical and thrifty ways to celebrate a wedding without wringing out your wallet.
  7. Options & Futures

    Mergers and Acquisitions: Definition

    The Main Idea One plus one makes three: this equation is the special alchemy of a merger or an acquisition. The key principle behind buying a company is to create shareholder value over and ...
  8. Personal Finance

    Have A Princess Wedding On A Pauper Budget

    Don't say "I do" to years of debt. We'll show you how to have fairy tale wedding on a frugal budget.
  9. Budgeting

    How To Attend A Wedding For Less

    How can you keep the costs of travel, fancy outfits and gifts under control when attending a wedding?
  10. Economics

    What's a Horizontal Merger?

    A horizontal merger occurs when companies within the same industry merge.
RELATED FAQS
  1. What's the difference between a merger and an acquisition?

    Learn about the difference between mergers and acquisitions. Discover what factors may encourage a company to merge or acquire ... Read Answer >>
  2. What can cause a merger or acquisition deal to fail?

    Mergers and acquisitions are resorted to when one or both companies involved have goals as diverse as seeking greater market ... Read Answer >>
  3. Why do companies merge with or acquire other companies?

    Some of the reasons for mergers and acquisitions (M&A) include:1. Synergy: The most used word in M&A is synergy, ... Read Answer >>
  4. In M&A how does an all-stock or all-cash deal affect the equity of the buying company? ...

    Mergers and acquisitions (M&A) are forms of corporate restructuring that are becoming increasingly popular in the modern ... Read Answer >>
  5. How does a merger affect the shareholders?

    Explore the effect of a merger and understand how the process affects shareholders of the newly merged firm in terms of stock ... Read Answer >>
  6. Are acquisitions only for large companies?

    Learn how mergers and acquisitions, despite what the media portrays, actually take place more often among small companies ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center