Hostile Firm's Strategies
- The strategy that is usually employed by the Hostile Firm is making an offer more lucrative than the White Knight's, so that the shareholders consider rejecting the White Knight's bid. This, however, can lead to bidding wars and finally to overpaying, by one or the other, for the target firm.
- Another option is known as the NL strategy. Here, the hostile firm allows the white knight to move ahead and waits for the acquisition to take place. Once things are settled between the two entities, the Hostile Firm launches a takeover offer for the White Knight. This takeover offer is generally a hostile one. The target (firm being bid on) can enter into standstill agreements with the White Knight to prevent it from turning Gray Knight.
Read more about this topic: White Knight (business)
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