DEFINITION of Saturday Night Special
A Saturday Night Special is now an obsolete takeover strategy where one company attempted a takeover of another company by making a sudden public tender offer, usually over the weekend. This merger and acquisition (M&A) technique was popular in the early 1970s when the Williams Act required only seven calendar days between the time that a tender was publicly announced and its deadline. Catching the target company off guard and over the weekend, effectively reducing its time for a response, often afforded the acquiring company an advantage.
BREAKING DOWN Saturday Night Special
A tender offer is basically an attempt to takeover control of a company by asking shareholders to sell their shares at a specified price (usually above market). If enough shareholders sell their shares, the takeover is complete. The Saturday Night Special was effective when the Williams Act required a minimum of seven days between the public announcement of the tender and its deadline. When the time period was extended to 20 days, this technique failed to be the quick strike it was originally intended to be. In addition, acquisitions of 5% or more of equity now need to be disclosed to the Securities and Exchange Commission (SEC).
Advancements in information technology helped erode the effectiveness of this strategy. A hallmark of financial markets today is the rapid exchange of information, so corporate takeover targets are often well ahead of potential unwanted to advances. In an interesting reversal of the rationale behind a Saturday Night Special play, takeover attempts today are often well publicized. By using the media, internet, and many other options unavailable in the 70s, potential acquirers often use PR to sway public perceptions in their favor.