HOW TO AVOID HOSTILE TAKEOVER ATTEMPT- TAKING CIPLA AS CASE STUDY

Abstract

Takeover can be formally defined as ‘acquisition of a certain block of equity capital or controlling interest in a company which enables the acquirer to exercise control over the affairs of the company’ and can be categorized broadly into two types a hostile takeover in the former case and a friendly takeover in the latter. When the takeover takes place in a hostile manner, i.e. against the wishes of the target company, the target company often adopts certain measures to prevent or discourage the acquirer from taking over the target company; these measures are called takeover defenses. The purpose of this study is to investigate which defense strategies are the most effective and easiest to put into practice by taking Cipla as case study. We have tried to answer few questions: What is a hostile takeover? What are the driving forces behind a hostile takeover? Which different hostile takeover defenses are available when facing a hostile takeover bid from another company? What effect did the chosen defense strategies have in some specific cases?