The Anti Hostile Takeover Tactics Of Target Firms And It’s Economic Consequences

Hostile takeover means that the acquirer is buying great amount of stocks of target firm from the secondary market to gain the control power of the target firm.The hostile takeover waves had happened several times in foreign countries,especially in America,and left far-reaching influence on the world economy.Back to our country,with the development of market economy,the enterprise mergers and acquisitions between phenomenons also intensified.Mergers and acquisitions of China’s regional economic,industry layout,etc will have far-reaching influence.The purpose of this paper is to study of malicious mergers and acquisitions on both sides.For mergers and acquisitions party,first is to analyze the motivation of m&a and the driving force of the enterprise mergers and acquisitions;Second,the analysis on the m&a party screening of the target company which includes market segment,the degree of profitability,leverage and cultural fit,and then on the basis of the screening criteria to determine the characteristics of the target company is as follows:smaller companies,decentralized equity structure,high development potential and undervalued companies,have the characteristics of the company may face a greater risk of being hostile takeover,it shall timely take measures to prevent malicious mergers and acquisitions.For the target company,there are two reasons why they against a hostile bid:the short-term motivation is to obtain higher pay,the long-term motivation is to achieve the company’s long-term strategy and have a stable development.In terms of strategy,they are mainly divided into two categories,namely preventive against malicious m&a strategy and operational against malicious m&a strategy,these strategies have different advantages and disadvantages,which one to use in depended on the actual situations.Analysis of m&a target companies again,the price of that in order to get control of the target company costs.Finally,the analysis of mergers and acquisitions strategy adopted by the,including mergers and acquisitions fund sources,such as the choice of the ways of mergers and acquisitions.A case study of "the battle of Wanke and Baoneng" mainly according to the front in this paper,the theoretical framework for analysis,respectively from the background,motivation,strategies and economic consequences.In brief,this paper hope that through the analysis of theory and case combination can be achieved for the target company’s theory of malicious mergers and acquisitions to supplement,as against a hostile bid for guidance to the practice of the target company.