Titan Medical Inc (TMDIF)

[JMAC13]

Responsive Corporate Takeover Defense Strategies
These types of strategies can be implemented by a company after it has been identified as a potential acquisition target by a prospective acquirer. A company can put in place many types of responsive defense strategies to mitigate an attempted corporate takeover.

A first responsive line of defense against a hostile corporate takeover would be to establish a poison pill provision that could be used to ward off or deter prospective acquirers. One type of poison pill would allow existing shareholders, excluding the acquirer, the right to purchase the target’s stock at a price considerably below its market value. By allowing existing shareholders to purchase additional shares at a discounted price, the shares held by the acquirer would become diluted, making the takeover transaction more unattractive and expensive. In 2012, such a strategy was implemented when Carl Icahn announced that he had purchased nearly 10% of the shares of Netflix in an attempt to take over the company. The Netflix board responded by instituting a shareholder-rights plan to make any attempted takeover excessively costly. The terms of the plan stated that if anyone bought up 10% or more of the company, the board would allow its shareholders to buy newly issued shares in the company at a discount, diluting the stake of any would-be corporate raiders and making a takeover virtually impossible without approval from the takeover target.



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