What is Unsolicited Bid?
412 reads · Last updated: December 5, 2024
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.
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. These offers typically occur when a 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 companies not actively seeking sale could lead to rapid expansion and increased market share.
Categories and Features
Unsolicited offers can be categorized into friendly and hostile types. Friendly offers are typically made with mutual agreement, while hostile offers occur when the target company's management opposes the acquisition. The advantage of friendly offers is fewer legal and operational hurdles, whereas hostile offers may require more legal strategies and tactics to overcome the target company's resistance.
Case Studies
A classic example is the 2008 acquisition of Anheuser-Busch by InBev. Despite initial resistance from Anheuser-Busch, InBev succeeded by raising its offer and directly communicating with shareholders. Another example is the 2014 hostile takeover bid by Valeant Pharmaceuticals for Allergan, which, although ultimately unsuccessful, highlighted the complexities and challenges of hostile offers.
Common Issues
Investors dealing with unsolicited offers may face legal challenges and resistance from the target company's management. Additionally, hostile offers can lead to cultural clashes and decreased employee morale. Investors should carefully assess the target company's value and potential integration risks.
