DEFINITION of Rump
BREAKING DOWN Rump
Rump shareholders can be forced to sell their shares without their consent by the underwriters, through a squeeze-out, depending on the percentage of shares owned by the majority — and as long as it is on the same terms as the offer made to the other shareholders. For example, in the United Kingdom, shareholders owning 90% of the company can consent to squeeze out the other minority shareholders.
The rump can stall or halt takeovers if they own enough shares. However, if they are not in a position to block a merger, their share of the company’s cash flow may be enough to discourage the acquiring company from completing the merger or acquisition in the first place.