What Are Killer Bees?

Killer bees are companies or individuals—such as investment bankers, accountants, attorneys, and tax specialists—that help target firms avoid being taken over by an unwanted suitor. Their job is to devise and implement 澳洲幸运5官方开奖结果体彩网:anti-takeover defꦺense stra🐼tegies, which generally consist of making the target less attractive or more difficult or costly to acquire.

Understanding Killer Bees

When a company targets another one for acquisition, it will usually first approach its 澳洲幸运5官方开奖结果体彩网:board of directors. If rebuffed, the acquirer could then return with a better bid, walk away, or seek to bypass management by initiating a 澳洲幸运5官方开奖结果体彩网:tender offer directly to shareholders.

Should takeover advances turn unfriendly or hostile, killer bees may be brought on board. Their job is 💞to come💜 up with feasible ways to make life uncomfortable for the prospective buyer, similar to how their namesake stings its victims when provoked until they back off and go away.

Killer bees rose to prominence during the 1980s hostile takeover craze. Back then, a category of investors with deep pockets, known as raiders, began buying 澳洲幸运5官方开奖结果体彩网:undervalued companies and then controversially dismembering them to bag a quick profit. Corporate America wasn't used to this type of behavior and enlisted the help of specialists to defend against these attacks.

Killer bees would present a series of options to the target's board based on its individual circumstances and the characteristics of the company seeking to buy it. To foil a hostile takeover attempt, they generally aim to make the prey either too expensive to acquire or so unattractive that the predator lose꧋s🧸 interest.

Killer Bees Methods

Following the 1980s, defensive measures known as 澳洲幸运5官方开奖结果体彩网:shark repellents were devised to discourage unfriendly takeover attempts. Popular strategies that killer bees use include:

• 澳洲幸运5官方开奖结果体彩网:Flip-In Poison Pill: Existing shareholders are granted the right to purchase additional shares at a discount, thereby diluting the ownership interest of the hostile party and making it harder and more costly for it to gain control. 
• 澳洲幸运5官方开奖结果体彩网:White Knight: A friendly company steps in to purchase the target on the verge of being taken over.
• Pac-Man: Named after the classic eat-or-be-eaten arcade game, the target company turns the tables on the acquirer by making a takeover bid for it.
• 澳洲幸运5官方开奖结果体彩网:Lobster Trap: A provision is passed prohibiting any shareholder with an ownership stake of more than 10 percent from converting 澳洲幸运5官方开奖结果体彩网:convertible securities into voting stock, thus preventing large shareholders from gaining enough votes to force the board to accept the merger.
• 澳洲幸运5官方开奖结果体彩网:Poison Put: A bond is issued that investors can redeem in full before its 澳洲幸运5官方开奖结果体彩网:maturity date.

Litigation, such as 澳洲幸运5官方开奖结果体彩网:standstill agreements, might also be used to delay any takeover.

Criticism of Killer Bees

Many of the anti-takeover defense strategies that killer bees utilize don't sit well with shareholders. Making the target less attractive or more expensive to buy generally has a habit of eroding 澳洲幸运5官方开奖结果体彩网:shareholder value and potentially crippling the company for years to come.

The drastic nature of some of these measures, and the frequent inability of regular shareholders to vote on them, has led their legality to ♏be questioned. Not all hostile bidders plan to make a quick buck and ruin companies and, in some cases, being taken over by one of them could be more beneficial from a financial standpoint for existing investors.

Limitations of Killer Bees

Over the years, these observations have led the courts to occasionally block companies from employing anti-takeover measures, if they are deemed to be unreasonable. The prospect of intervention from higher powers inevitably means that it is now much harder for killer bees to deliver on their mandates.