Actionable Ideas for Companies and Sponsors

Corporations’ Growing Use of Hostile Approaches for Strategic Targets

The “corporate raider” stigma is no longer holding back corporate buyers from pursuing aggressive tactics to acquire highly important strategic targets. In 2017, there were 19 hostile deal approaches by strategic buyers, and through early March 2018, there already have been five such approaches. Broadcom/Qualcomm, Comcast/Sky PLC and Melrose/GKN Plc are all recent examples of this trend. The reasons for this change in approach are (1) the need for growth through acquisition continues unabated, (2) the threat to growth and survival from technology disruption is increasing and (3) the dramatic rise in corporate activism is causing Boards to be far more aggressive in their acquisition strategies.

Consequently, companies should revisit their approach to using hostile takeovers, reevaluate potential targets that have been reluctant to engage historically in friendly transactions, and more carefully evaluate their own defense profile.