A high-risk hostile takeover defense in which the target firm tries to take over the company that has made the hostile bid by purchasing large amounts of the would-be acquirer's stock. The Pac-Man defense is supposed to scare off the would-be acquirer, which doesn't want to be taken over itself. The target may sell off its own assets or borrow heavily in order to acquire enough of the acquirer's stock to prevent the takeover.


The Pac-Man defense does not always work, but it was first successfully used in 1982 by Martin Marietta to prevent a takeover by Bendix Corp. In 1988, American Brands used it successfully against E-II, and TotalFina used it in 1999 to prevent a takeover by Elf Aquitaine. Some analysts speculated that Cadbury would try to use the Pac-Man defense against Kraft in 2009.

The Pac-Man defense may be used alone or in conjunction with other takeover defenses, such as the white knight.

  1. Pac-Man Defense

    A defensive tactic used by a targeted firm in a hostile takeover ...
  2. Hostile Takeover

    A hostile takeover is the acquisition of one company by another ...
  3. Takeover Bid

    A takeover bid is a corporate action in which an acquiring company ...
  4. Killer Bees

    An individual or firm that helps a company fend off a takeover ...
  5. Hostile Bid

    A specific type of takeover bid that is presented directly to ...
  6. Suicide Pill

    A defensive strategy by which a target company engages in an ...
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