A hostile takeover is the acquisition of a target company by another acquiring company that is accomplished by going directly to the company's shareholders or fighting to replace management to get the acquisition approved. In a hostile takeover, the targeted company's management does not want the deal to go through.
KKR and RJR Nabisco
One of the most prominent hostile takeovers of all time was the leveraged buyout (LBO) of RJR Nabisco by investment bank KKR (KKR) in the late 1980s. This takeover was well-documented in "Barbarians at the Gate: The Fall of RJR Nabisco." RJR Nabisco was created by a record-setting merger between Nabisco and RJ Reynolds for $4.9 billion in 1985. RJR Nabisco was known for the lavish spending of its CEO, F. Ross Johnson, who had a fleet of private jets.
RJR Nabisco fell on hard times after its share price dropped during the 1987 stock market crash. Johnson started looking at possible mergers, believing the cigarette business was likely to come under pressure due to health issues with smoking. He met with numerous investment banks, including KKR, who suggested a LBO structure.
Johnson then began pursuing a deal to take the Nabisco brand private while keeping the cigarette business in the hands of shareholders. He got into a bidding war with KKR. KKR eventually won the bidding war, but at the expense of saddling Nabisco with an extreme amount of debt due to the LBO structure. Although he lost the bidding war, Johnson walked away from the deal with about $23 million after taxes.
Vodafone and Mannesmann
Another major hostile takeover in the telecommunications sector was when Vodafone (VOD), a British telecommunications company, took over Mannesmann, a German mobile phone company, for around $183 billion in stock in 1999. This merger was the first time a German company had been taken over by a foreign company.
Vodafone and Mannesmann waged an intense battle for about three months before Mannesmann ultimately acquiesced to Vodafone's demands. Mannesmann shareholders received around 59 shares of Vodafone for each share they owned.
Icahn Enterprises and Clorox
Hostile takeovers are not always successful for the acquiring company. In 2011, billionaire activist investor Carl Icahn attempted three separate bids to acquire Clorox (CLX), which the board rejected each time and put into place a new shareholder rights plan to defend against further takeover attempts. The Clorox board even held strong against Icahn's attempts at a proxy fight, ultimately ending without a takeover being finalized.
Mylan and Perrigo
Another big takeover that failed to be successful involved generic pharmaceutical company Mylan and its competitor Perrigo (PRGO). In April 2015, Mylan (MYL) failed to reach an agreement with Perrigo's management on a possible acquisition.
As those negotiations broke down, Mylan instead attempted a hostile takeover by offering to buy the company directly from shareholders for $26 billion. The offer failed as not enough shareholders agreed to sell their stock and cost Mylan millions while coming up empty.