))
Investment Term For The Day - Lady Macbeth Strategy
Manage episode 298434844 series 2956461
Content provided by Africa Business Radio. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Africa Business Radio or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://player.fm/legal.
A Lady Macbeth strategy is a corporate takeover scheme in which a third party poses as a white knight to gain trust, only to then turn around and join forces with the unfriendly party in a hostile takeover bid. Behind the scenes, the hostile bidder and supposed white knight to the target company will collude to achieve their aim of acquiring a company that is trying to resist the attempt.
This particular strategy is named after Lady Macbeth, one of Shakespeare's most frightful and ambitious characters, who devises a cunning plan for her husband, the Scottish general, to kill Duncan, the King of Scotland.
One of the biggest fears facing many companies is the prospect of getting taken over against their wishes by a 1980s-style corporate raider and then broken up and sold off in pieces. Sometimes, rebuffing the advances of these opportunistic investors is not enough. Refuse to negotiate and they could find a way to conquer anyway, such as by initiating a tender offer directly to shareholders, employing a proxy fight, or attempting to buy the necessary company stock in the open market.
If the hostile party succeeds in drumming up enough support and digging its claws in, the management’s only alternative might be to hope and pray that a white knight gallops onto the scene at the last minute to save the day.
In exchange for some incentives, such as paying a smaller premium to take control of the company than otherwise would be required under competitive bid conditions, a friendly white knight might be willing to play the role of saviour and rescue the target from the clutches of another prospective buyer with intentions to bleed it dry to make a quick profit.
Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.
…
continue reading
This particular strategy is named after Lady Macbeth, one of Shakespeare's most frightful and ambitious characters, who devises a cunning plan for her husband, the Scottish general, to kill Duncan, the King of Scotland.
One of the biggest fears facing many companies is the prospect of getting taken over against their wishes by a 1980s-style corporate raider and then broken up and sold off in pieces. Sometimes, rebuffing the advances of these opportunistic investors is not enough. Refuse to negotiate and they could find a way to conquer anyway, such as by initiating a tender offer directly to shareholders, employing a proxy fight, or attempting to buy the necessary company stock in the open market.
If the hostile party succeeds in drumming up enough support and digging its claws in, the management’s only alternative might be to hope and pray that a white knight gallops onto the scene at the last minute to save the day.
In exchange for some incentives, such as paying a smaller premium to take control of the company than otherwise would be required under competitive bid conditions, a friendly white knight might be willing to play the role of saviour and rescue the target from the clutches of another prospective buyer with intentions to bleed it dry to make a quick profit.
Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.
304 episodes
Share
