And the kindly, loving private equity gal says, "Wanna get taken over?" And then the even more kindly, loving company target person says, "Ummmmm...no."
That's the anti-hostile-takeover "just say no" defense, and it is a reflection of that other kindly, loving lady, Nancy Reagan, best-dressed White House #2 in history. (Her advice to angry teens with low self-esteem when they were pressured to take drugs was to, um...just say no. Luckily, that worked and drugs are no longer a problem in America.*)
In reality, most investors don't want to have to go hostile when taking over a company—not because they are...nice. But because being hostile usually costs more money, creates employee friction with disparate loyalties, and ends up being a drag on investment returns. So just saying "no" often scares off suitors and the conversation is over quickly.
*Denotes sarcasm.
Related or Semi-related Video
Finance: What is the All Holders Rule?4 Views
Finance a la shmoop, what is the all holders rule? No this is not about
post-coital rules of engagement.. The holder here is about those holding stock [Two peoples heads pop out from under a duvet and a stop sign appears]
in a company in this case likely holding stock in a company where a contentious
takeover bid has come in from the cold cruel world outside with a bidder [Pacman]
wanting to pay $17 and 23 cents a share for about a $2 premium over where the
stock was trading yesterday while a rival set of shareholders want more like
20 bucks a share to sell the iPod hearing aid company to just you know [Billboard for the iPod hearing aid company]
sell and go away. Well the all holders rule came along as part of the 1934 Act
if the SEC was establishing granular rules so that the legally [Two people in suits walking down a corridor]
unsophisticated weren't turned into lunch when the hungry Wall Street wolves [A wolf appears and drags one of them away]
got a hankering for deals. So what's the rule with all holders, well it's simply
that all holders of the same exact class of security. i.e. basic common stock have
to be offered the same deal that is one offer can't be given to the people who [Good offer document is given to Company A]
wanted to sell at just 17 dollars and 23 cents and then some other punitive deal [Bad deal given to Company B]
like is offered to the others like you know.. if you don't take this by 4:00 p.m.
next Thursday we'll teepee your homes and then offer at most 16 bucks a share [Angry looking guy in a suit]
going down a dime a week until you say uncle, or aunt yeah well that's the all
holders rule. All holders get the same deal.
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