Business Definition for: show stopper
show stopper
legal barrier erected to prevent a takeover attempt from becoming successful. For example, a target company may appeal to the state legislature to pass laws preventing the takeover. Or the company may embark on a
scorched-earth policy
, making the company unappealing to the suitor.
See also
shark repellent
Related Terms:
measure undertaken by a corporation to discourage unwanted takeover attempts. Also called porcupine provision. For example:
- fair price provision requiring a bidder to pay the same price to all shareholders. This raises the stakes and discourages tender offers designed to attract only those shareholders most eager to replace management.
- golden parachute contract with top executives that makes it prohibitively expensive to get rid of existing management.
- defensive merger, in which a target company combines with another organization that would create antitrust or other regulatory problems if the original, unwanted takeover proposal was consummated. See also safe harbor.
- staggered board of directors, a way to make it more difficult for a corporate raider to install a majority of directors sympathetic to his or her views.
- supermajority provision, which might increase from a simple majority to two-thirds or three-fourths the shareholder vote required to ratify a takeover by an outsider.
Referring Terms:
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