Defences against takeovers

In this lesson

1. 0:00 Defences against hostile takeovers
2. 0:16 Poison pill strategy explained
3. 0:48 Golden parachutes as deterrent
4. 1:14 White knight counter-offer defence
5. 1:58 Supermajority voting threshold strategy

About this lesson

We'll explore poison pills, golden parachutes, white knights, and supermajority requirements—each a distinct strategy that either increases the cost of acquisition, protects key staff, brings in a friendly alternative buyer, or raises the approval threshold needed for a takeover to succeed. Understanding these defences is essential for your Strategic Business Leader and corporate strategy studies, as hostile takeovers and defensive tactics frequently appear in case study scenarios and exam questions. A poison pill works by allowing existing shareholders to purchase additional shares at a discount if a bidder acquires a certain percentage of the company. This dilutes the bidder's ownership stake and makes the acquisition significantly more expensive. Golden parachutes are compensation packages—including severance and stock options—offered to senior executives and key employees in the event of a change of control, designed to discourage them from supporting the hostile bid. A white knight defence involves the target company seeking out a friendly third party to make a counter offer that appeals more to shareholders in terms of price, culture, or strategic fit. Finally, a supermajority defence raises the threshold for shareholder approval from a simple majority (just over 50%) to a higher percentage, such as 75% or 80%, making it far more difficult for a hostile bidder to secure the votes needed to proceed.

Duration: 2m