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Unformatted text preview: 3-28-2011: Hostile TakeoversHostile Takeover Bus Press Articles for ReadingShareholder Model- belief is that if you do the right thing, it also benefits stakeholdersoProblem is that management and Board may act in their own interestsoSolution would be to pay for performance but this often means that if economy does well, theyll do well without having to do anything (so this is a problem rather than a solution)oCompanies with pay for performance models have better numbers (e.g. EBITDA) but now good corporate governance is embedded in the stock priceOne way to discipline management that doesnt act in shareholders interests is a hostile takeoverbecause if they arent acting in shareholders interests, shareholders leave, stock price drops, and someone offers a premium and replaces managementHostile takeovers- bypass management and offer directly to shareholders AND management opposes initial offeroBidding company perspective:oYES-do a hostile takeover: No other option to execute strategy...
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