Unsolicited Bid
An unsolicited bid is an offer made by an individual, investor, or company to purchase a company that is not actively seeking a buyer. Unsolicited bids may sometimes be referred to as hostile bids if the target company doesn't want to be acquired. They usually come up when a potential acquirer sees value in the target company.
Unsolicited Offer
Definition
An unsolicited offer refers to a takeover bid made by an individual, investor, or company to a company that is not actively seeking buyers. If the target company is unwilling to be acquired, an unsolicited offer may sometimes be referred to as a hostile takeover bid. These offers typically arise when the potential buyer sees value in the target company.
Origin
The concept of unsolicited offers originated in the mid-20th century when corporate mergers and acquisitions began to increase. As capital markets developed, investors and companies realized that acquiring other companies could quickly expand their business and market share. Hostile takeovers became a common corporate strategy, especially in the 1980s.
Categories and Characteristics
Unsolicited offers can be divided into two categories: friendly offers and hostile offers. A friendly offer is a takeover bid made after negotiations with the target company's management, usually with the support of the target company's board of directors. A hostile offer, on the other hand, is a takeover bid made directly to the target company's shareholders without the agreement of the target company's management.
Characteristics:
- Unsolicited offers are typically coercive, and the target company's management may oppose them.
- The acquirer usually offers a price higher than the market value to attract the support of the target company's shareholders.
- Hostile offers may prompt the target company to adopt defensive measures, such as poison pills or white knight strategies.
Case Studies
Case 1: In 1984, T. Boone Pickens made a hostile takeover bid for Gulf Oil. Despite strong opposition from Gulf Oil's management, Pickens succeeded in acquiring Gulf Oil by directly offering a high price to the shareholders.
Case 2: In 2008, InBev made a hostile takeover bid for Anheuser-Busch. Although Anheuser-Busch's management initially opposed the bid, InBev eventually succeeded in acquiring the company after raising the offer and gaining shareholder support.
Common Questions
1. What is the difference between an unsolicited offer and a solicited offer?
An unsolicited offer is a takeover bid made without prior negotiations with the target company's management, while a solicited offer is made after negotiations and with the support of the management.
2. What impact does a hostile offer have on the target company?
A hostile offer may lead the target company's management to adopt defensive measures, increase operational costs, and potentially affect employee morale and the company's reputation.
