How might one undertake the hostile takeover of a corporation?

Question

How might one undertake the hostile takeover of a corporation?

Answer 1

One way is by buying a majority of the shares. It can only occur in public companies listed on the stock exchange. Generally a powerful investor will buy out the majority shareholding by making offers to shareholders (called a tender offer), most times over and above what the stock is currently trading at on the open market. They must also lodge their plans for the company with the securities and exchange commission. There is also a creeping tender takeover which bypasses the SEC. Using this method the takeover entity gradually accumulates a majority shareholding over time. This is usually detected though and the company has more time to develop defensive strategies to fight it off.

There is another type of takeover called a proxy takeover where the hostile group convinces the shareholders to vote the board out. This is the type of takeover that Yahoo was threatened with when the deal to sell to Microsoft feel through. Yahoo defended itself against this by offering the hostile parties membership to their board which was accepted.