Chapter 20. The diversifying of contextual constraints and argumentative strategies in friendly and hostile takeover bids*

Abstract

This paper investigates how the argumentative situation affects arguers’ strategic maneuvering in a financial context, devoting particular attention to the situational characteristics at the confrontational level. To this purpose, this study considers takeover bids, a class of financial activities in which one company (the bidder), in order to acquire the control of another company (the target), proposes to the shareholders of it to sell their shares. When seen from an argumentative perspective, takeover bids manifest an interesting and original aspect: beside a composite audience (corresponding to the shareholders and other stakeholders of the two corporations), a multiple arguer is always involved since the bidder and the target boards of directors are both requested to argumentatively justify their respective position. The important distinction made in financial economics between bids supported by the target board (friendly) and those that are opposed (hostile) is reinterpreted from the perspective of argumentation analysis. Hence, friendly and hostile bids are specified as two kindred activity types belonging to the class of takeover bids, i.e. two species of the same genus, differing mostly because they imply two different confrontational situations which evidently condition the strategies of the concerned arguers. In friendly offers, the bidder and target boards devise a coordinated argumentation in which each side moves within the boundaries set by the interaction field, i.e. the commitments implied by their institutional role and those imposed by takeover rules. Hostile offers show a higher complexity as bidder and target directors separately try to persuade the same audience of the acceptability of their respective standpoints, while reacting to the argumentation advanced by the other side.