Hostile Takeovers: Desirable or Dangerous? A Survey Study into the Circumstances Under Which Hostile Takeovers in the Netherlands Are (Un)Permissible

J Nijland,T L M Verdoes,N T Pham,M P Lycklama A Nijeholt

doi:10.26417/291vza59o

Abstract

Abstract A number of recent hostile takeover attempts in The Netherlands have triggered the discussion in the Netherlands on the circumstances under which protection of the target company against a hostile takeover should be justified or not be justified. To answer this question, 21 experts involved in mergers and acquisitions from various angels on the highest (management) level, were selected to participate in a survey investigation combining open questions and giving scores for submitted factors. The outcomes show that the participants advocate non-protection in case of relatively high performance of the bidding company, new value creating opportunities a non-responsive board of the Target with personal interest of the board, and cash payment for the target. They are in favor of protection in case of takeover attempts that incur personal board benefits of bidder or target, intended debt push down financing, and in case of considerable societal risks and consequences.

Highlights

Hostile takeover bids attract considerable attention such as two takeover attempts in the Netherlands in 2017: the takeover bid for AKZO Nobel by PPG and the takeover bid for Unilever by Heinz Kraft
Managed companies will perform less well, resulting in a falling share price, making these companies attractive acquisition candidates. It is in the interest of the shareholders of the target company and of all stakeholders that a takeover emerges in such cases
The results indicate that participants prefer an open dialog for investigating the new opportunity: if there is no consultation between Target and Bidder during the hostile takeover process, most participants consider protection against the acquisition admissible

Summary

Introduction

Hostile takeover bids attract considerable attention such as two takeover attempts in the Netherlands in 2017: the takeover bid for AKZO Nobel by PPG and the takeover bid for Unilever by Heinz Kraft. Both hostile bids were opposed by the management of the target company because the bids would not be in the interest of the company or the long-term value of the company. Managed companies will perform less well, resulting in a falling share price, making these companies attractive acquisition candidates According to this theory, it is in the interest of the shareholders of the target company and of all stakeholders that a (hostile) takeover emerges in such cases. In this paper the following research question is examined

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