The effects of implantation of preventive defense strategies on acquisition process

Abstract

Target company uses preventive strategies in order to reduce or completely remove the possibility of taking control over it. The paper deals with the strategies of adoption of amendments to the Articles of organization as well as making of beneficial contracts with managers to prevent or reverse the hostile takeover of the company. The strategy of securities issuing which affects the value of company for potential acquirer because of the higher costs of acquisition is also presented in the article. The subject of paper is investigation of effects of these strategies implementation on the acquisition process and the aim is to show the possibilities for prevention of the takeover process by acquisition company. The paper concerns the hypothesis that the target company could 'dilute' its capital structure in order to deter acquirer from the intention to take control over the company. Theoretic background is based on inductive-deductive method as well as the methods of analysis and synthesis.

Keywords

• hostile takeover
• corporate governance
• defence strategies
• bidder's company
• target company