Defensive Acquisition

Mergers and Acquisitions (M&A) as a practice is all about companies seeking to merge or buy other companies with the goal of expansion and growth. However, there are occasions when a defensive strategy might be in place—think: to defend against competitors and to stave off hostil takeovers.

Example: The merger in 2018 of T-Mobile and Sprint has a defensive acquisition component to it. Given that the combined company is sufficiently large enough to rival Verizon or AT&T, it also has the added defensive aspect of making both T-Mobile and Sprint off limits to prospective acquisition by Verizon or T-Mobile/Sprint due to potential antitrust law violations.

The deterrent factor is something not lost on corporate rivals. It's akin to buying a gun, not to so much excel in marksmanship as to be a preventative measure against physical attack.