Think about doing something in a clandestine way: having a secret affair might come to mind, or two politicians from opposing political parties meeting to reach a compromise without anyone else knowing about it. A clandestine takeover refers to a group or individual trying to gain control over a company without the knowledge of upper management or the Board of Directors.
If the target is a public company, they might buy stock on the secondary market without anyone knowing, until they have purchased enough where they have to disclose it as required by regulators. If they were on the up and up they would meet with the Board and make a good offer that shareholders would have the opportunity to approve or disapprove.
A clandestine takeover is more like a hostile bid. Let’s say Carlos Icanbuyit manages a hedge fund and has his eyes on buying We Cure Anything Pharmaceuticals. Carl’s hedge fund teams up with another pharmaceutical company to secretly buy up stock in We Cure Anything and make a takeover bid. We Cure and its large shareholders are not at all happy about this clandestine takeover attempt and file a lawsuit claiming the acquirers used insider trading. Carl and the pharmaceutical company’s takeover attempt fails and they lose the lawsuit as well, so this little clandestine idea of theirs ended up costing them millions.
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Finance: What is a Pac Man Defense?21 Views
Finance a la shmoop what is a pacman defense?
[Pacman eating] yeah well wacka wacka to you too...Hostile takeovers are rare in real life not so
rare in pac-man but when they do happen there exists a whole cadre of strategies
behind defending them at least from the company's perspective being taken over
there and pac-man defense is inarguably the best named strategy of all of
them in essence what happens when we'll say an angry competitor let's call him
blinky Inc tries to buy an angrier competitor let's call them inky inc.
well blinky would be buying shares of inky in the open marketplace filing to [Blinky and inky appear]
go past 15% ownership and eventually own enough shares to elect its own Board of
Directors and make a takeover happen well in a Pac Man defense as blinky is
snarfing up shares of inky, inky buys shares of blinky sort of turning the
tables you know like this and while you're gobbling up that competition and [Pacman gobbling competition]
don't forget to eat a bunch of cherries or a strawberry every once in a while
because you know you still need your fruits and veggies
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What is a Hostile Takeover? A hostile takeover happens when a buyer goes past the management of a company to acquire it. The company’s management...