metafory takeovers

a large block of stock is held by an unfriendly company. This forces the target company to repurchase the stock at a substantial premium to prevent a takeover. It is also known as a "bon voyage bonus" or a "goodbye kiss".

greenmail

An agreement made between a company planning a takeover and a bank, which prevents the bank from financing any other potential acquirer's bid.

bankmail

The target firm issues a large amount of shares at below-market prices, which the acquiring company will then have to purchase if it wishes to complete the takeover.

whitemail

The company issues a large number of bonds with the condition they must be redeemed at a high price if the company is taken over.

macaroni defense

In this, the company passes a provision preventing anyone with more than 10% ownership from converting convertible securities into voting stock.

lobster trap

A highly leveraged takeover that, to go through, requires a selling off of some of the acquired company's assets.

busted takeover

the target company attempts to make its stock less attractive to the acquirer. There are two types of poison pills:

poison pill

allows existing shareholders (except the acquirer) to buy more shares at a discount.

flip-in

allows stockholders to buy the acquirer's shares at a discounted price after the merger.

flip-over

the target company engages in an activity that might actually ruin the company rather than prevent the hostile takeover. Also known as a "suicide pill."

jonestown defense

A stalling tactic used by management to deter a company that is showing interest in taking them over.

sandbag

a slang term used to refer to a surprise takeover attempt

saturday night special

An anti-takeover strategy that a firm undertakes by liquidating its valuable and desired assets and assuming liabilities in an effort to make the proposed takeover unattractive to the acquiring firm.

scorched earth policy

any one of a number of measures taken by a company to fend off an unwanted or hostile takeover attempt.

shark repellent

A form of defense used in a hostile takeover situation. The target firm turns around and tries to take over the company that has made the hostile bid.

pac man

Management threatens that, in the event of a takeover, the entire management team will resign. This is a variation of the poison pill defense.

people pill

A company that is prime for takeover, but has not yet been approached by an acquiring company.

sleeping beauty

A defensive strategy by which a target company engages in an activity that might actually ruin the company rather than prevent the hostile takeover. Also known as the "Jonestown Defense."

suicide pill

a legal barrier to a takeover attempt that is virtually impossible for the suitor to overcome. For example, a target company might convince state legislators to pass various antitakeover laws that would preclude the takeover

show stopper

a third party poses as a white knight to gain trust, but then turns around and joins with unfriendly bidders.

Lady Macbeth strategy

A company that makes a friendly takeover offer to a target company that is being faced with a hostile takeover from a separate party.

white knight

A company that makes a hostile takeover offer on a target company.

black knight

A second, unsolicited bidder in a corporate takeover. A gray knight enters the scene in order to take advantage of any problems between the first bidder and the target company.

gray knight

Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in the target firm.

white squire

A company that was once making a takeover attempt but ends up discussing a merger with the target company.

yellow knight

A merger or company sale where one company involved in the deal gives the other very attractive terms and conditions

sweetheart deal