This could be an arduous process for Bayer that could take months or longer. Bayer, a German company, is not listed in the United States, and to acquire Monsanto, an American company, in a share exchange, it would have to register its shares with the Securities and Exchange Commission. Should it want to offer a stock component in a sweetened offer, things would get complicated. Prediction: Medivation will be sold, to a third party if it can find another bidder in time, or it will be forced to make a deal with Sanofi.Īn interesting twist is also pushing Bayer’s strategy: Its offer of $122 a share is all in cash. Sanofi has started the consent solicitation, and Medivation will have to fight the hardest fight – persuading its shareholders not to support the Sanofi slate. This forces the hostile bidder to wait until the annual meeting to try to replace the directors and then have them remove the poison pill. Companies typically limit this maneuver by eliminating the right of shareholders to call a special meeting or act by written consent. Under the law in Delaware, where Medivation is incorporated, directors on a board in which every director is up for election at the same time can be removed at any time with or without cause. The reason is that although the nomination deadline for Medivation’s annual meeting has passed, Medivation allows shareholders to act by written consent at any time. Sanofi holds all the cards in its attempt to take over Medivation. Prediction: Gannett’s hostile takeover attempt is not long for this world. Tribune Publishing’s maneuver would not have stopped Gannett had it been able to run a director election, but it does make Gannett’s effort that much harder. The board probably has ample justification because it received a price of $15 a share and some technological exchanges, but it does not preclude Gannett from succeeding, provided that Gannett waits a whole year to submit a slate of directors at the next annual shareholder meeting. The new board would then eliminate the poison pill, allowing the hostile bidder to acquire the target. To avoid setting off the poison pill, a hostile bidder had to replace a majority of the target’s board. These days, that threshold is typically 10 to 15 percent of the outstanding shares. The poison pill effectively allowed a board to cap the number of shares a hostile bidder could acquire at a certain threshold. Before the poison pill, target companies were often on the back foot, lacking a defense against a barbarian at the gate. Invented in the 1980s by the lawyer Marty Lipton, the poison pill changed takeover strategy. The chief hurdle to take into account when planning a hostile takeover is the shareholder rights plan, more commonly known as the poison pill. Assumed dead after Air Products and Chemicals failed to take over Airgas, hostile takeovers seem to be again sprouting up everywhere.Īn examination of the most significant deals pending provides a nice lesson not only in how hostile takeovers work but in how would-be acquirers often make common mistakes.
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