When you hear phrases like "dawn raid", "poison pill", and "shark repellent" it might seem like you are talking about the latest action movie, but there's nothing fictional about them - they are all terms used in the world of mergers and acquisitions (M&A). Owning stock in a company means you are part owner, and as we see more and more sector-wide consolidation, mergers and acquisitions tend to be the result, so it is important to know what these terms mean for your share holdings.

Mergers, acquisitions and takeovers have been a part of the business world for centuries.. Through mergers and acquisitions, a company can (at least in theory) develop a competitive advantage and ultimately increase shareholder value.

There are several ways that two or more companies can combine their efforts. They can partner on a project, mutually agree to join forces and merge, or one company can outright acquire another company, taking over all its operations, including its holdings and debt, and sometimes replacing management with their own representatives. It's this last case of dramatic unfriendly takeovers that is the source of much the colorful vocabulary that we will explain here.
Hostile Takeover
This is an unfriendly takeover attempt by a company that is strongly resisted by the management and the board of directors of the target firm. These types of takeovers are usually bad news, affecting employee morale at the targeted firm, which can quickly turn to animosity against the acquiring firm. Grumblings like, "Did you hear they are axing a few dozen people in our finance department…" can be heard by the water cooler. While there are examples of hostile takeovers working, they are generally tougher to pull off than a friendly merger.

Dawn Raid
This is a corporate action more common in the United Kingdom although it can occur in the Unites States. During a dawn raid, a firm or investor aims to buy a substantial holding in the takeover-target company's equity by instructing brokers to buy the shares as soon as the stock markets open. By getting the brokers to conduct the buying of shares in the target company (the "victim"), the acquirer (the "predator") masks its identity and thus the takeover can be a fate accompli before the victim is aware. In the U.K., there are now restrictions on this practice.

Saturday Night Special
This is a sudden attempt by one company to take over another by making a public tender offer. The name comes from the fact that these maneuvers used to be done over the weekends when the stock market is closed. This too has been restricted by legislation in the US.

And "shark repellent"? That is any actions taken by the victim to avoid the takeover!

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