Hostile takeovers: How to avoid the jump

Author: | Published: 1 Dec 2006

Global M&A is booming, characterized by many more financial buyers, consortia of large private equity funds willing to bid on large capitalization companies and hedge funds acting as proactive market participants. These features of the new M&A market have contributed to a rise in deal jumping, where bidders make a competitive bid for a party to a pre-existing M&A deal. Deal jumping is not new, but the financial environment, as well as the structure of US deals, provides a fertile background for deal jumpers, which include both strategic and financial buyers and which are present both in US and cross-border transactions.

The volume of global M&A deals announced this year through the end of the third quarter has reached $2.3 trillion, up 28% from last year, and is approaching levels last seen in 2000. Global hostile activity is up, to $440 billion this year...