Although hostile takeovers happen more rarely than friendly mergers and acquisitions, they still play an important role in the M&A market.
Hostile takeovers can drive market efficiency by holding underperforming companies accountable, maximizing shareholder value through direct offers, and promoting industry consolidation. For acquirers, they can also provide a fast-track route to growth and expansion.
This article lists 10 famous examples of hostile takeovers, what the term means, and how you can learn from them.
What is a hostile takeover?
A hostile takeover occurs when an acquiring company attempts to take over a target company against its will.
In a friendly acquisition, both parties — an acquirer and a target company — are aligned on the deal, with the terms approved by the target company’s board of directors and management team.
In a hostile takeover, the target company’s management and board don’t agree on the deal offer. However, the acquirer then attempts to gain control over its target by going directly to the target company’s shareholders, often offering to pay more than the current market price for their shares. The aim is to buy enough of the target company’s stock to achieve a controlling interest, typically 51% ownership. Alternatively, the acquirer can fight to replace current management.
The main reasons for a hostile takeover attempt from the acquirer’s point of view are the following:
- The target is undervalued
- Desire to own the target’s brand, technology, intellectual property, valuable assets, or operations
- Attempt by activist investors to change the target’s operations or management
Hostile takeover strategies
There are two main strategies for hostile takeovers:
- Tender offer
In a tender offer, the acquirer makes a direct bid to shareholders, offering a premium price for their shares to encourage them to sell.
- Proxy fight
In a proxy fight, the acquirer persuades shareholders to vote for new management or board members who would support the takeover.
Defense strategies
Target companies may try to resist hostile takeover attempts with the following defense tactics:
- Poison pill
The poison pill defense tactic is also known as the shareholder rights plan. The target company issues more shares to dilute stock value, making it harder and costlier for the acquirer to gain control.
- White knight
The white knight defense is when the target company seeks help from a friendly buyer who acquires it instead of the hostile bidder.
- Crown jewel
The target company sells or transfers its most valuable assets to make itself less attractive to the acquirer.
- Golden parachute
Key executives are promised large financial rewards if they lose their jobs due to a takeover, increasing costs for the acquirer.
- Greenmail
The target company buys back its shares at a premium price from the acquirer to stop the takeover attempt.
- Pac-Man defense
The target company turns the tables by attempting to buy the acquirer instead. This tactic doesn’t work with smaller companies that don’t have much capital
10 famous examples of hostile takeovers
Now, let’s review the most famous hostile takeovers of recent times.
1. Elon Musk and Twitter
Year: 2022
Deal value: $44 billion
Industry: Technology
This is one of the most recent hostile takeovers.
Elon Musk’s acquisition of Twitter began in early 2022 when he became its largest individual shareholder by purchasing a 9% stake. By April, he had announced plans to acquire the whole company for $44 billion, stating his intent to promote free speech and reduce spambots. Although Twitter initially resisted by adopting the poison pill defense, negotiations progressed, and the company agreed to Musk’s offer.
The deal faced turbulence when Musk paused it in May, citing concerns over the number of fake accounts on the platform. Twitter provided data to address his concerns, but Musk attempted to back out in July. In response, Twitter filed a lawsuit to enforce the agreement. By October, Musk recommitted to the original terms and completed the purchase, officially becoming Twitter’s owner. Post-acquisition, he made significant changes, including mass layoffs, overhauling the verification system, as well as plans to transform Twitter into an “everything app” called X.
Discover more recent M&A deals in our dedicated article.
2. JetBlue and Spirit Airlines
Year: 2022
Deal value: $3.8 billion
Industry: Airline
In May 2022, JetBlue made a hostile takeover bid for Spirit Airlines, after its offer of $33 per share was rejected by the target company. Spirit had preferred to merge with Frontier Airlines, but JetBlue bypassed Spirit’s management, appealing directly to its existing shareholders with an offer of $30 per share. JetBlue argued that Spirit’s rejection was unsupported and pushed shareholders to vote against the Frontier deal, emphasizing that their bid would be more beneficial for Spirit’s future.
A federal judge blocked the merger, agreeing with the US Department of Justice that it would harm competition and raise ticket prices.
3. Sanofi-Aventis and Genzyme Corp.
Year: 2011
Deal value: $20.1 billion
Industry: Pharmaceutical
The hostile takeover between Sanofi-Aventis and Genzyme Corp. occurred in 2010 when Sanofi, a French pharmaceutical company, wanted to buy Genzyme, a US biotech firm specializing in rare diseases. Genzyme resisted the offer, leading to conflict. Sanofi started a public campaign to pressure Genzyme’s shareholders into selling.
After months of negotiations, the two companies reached a deal in 2011. Sanofi agreed to pay $74 per share, with additional payments tied to Genzyme’s future performance, bringing the total deal value to around $20.1 billion. This acquisition allowed Sanofi to expand into the lucrative market for rare disease treatment.
4. Kraft Foods Inc. and Cadbury PLC
Year: 2009
Deal value: $19.5 billion
Industry: Food
In September 2009, Kraft Foods made a $16.3 billion offer to acquire Cadbury. The goal of this offer was Kraft’s desire to strengthen its position in the global confectionery market.
However, Cadbury’s chairman rejected the deal. The company formed a defense team, calling Kraft’s bid unattractive. The UK government also opposed it, stating any offer should respect Cadbury’s value.
Despite the objections, Kraft raised its offer to $19.5 billion and completed the acquisition in January 2010, which makes it an example of a successful hostile takeover.
5. Microsoft and Yahoo!
Year: 2008
Deal value: $44.6 billion
Industry: Technology
This is an example of a failed hostile takeover attempt.
In 2008, Microsoft launched a hostile takeover bid for Yahoo, offering $44.6 billion. Yahoo initially rejected the offer, claiming it undervalued the company and that it could perform better independently. Microsoft then appealed directly to Yahoo’s shareholders, hoping to gain their support. The battle intensified with Microsoft raising its offer, but Yahoo continued to resist, pushing for a better deal or a merger with other companies. After several months of pressure, Microsoft eventually backed down, and the deal was never completed.
Explore more unsuccessful mergers and acquisitions examples in our dedicated article.
6. InBev and Anheuser-Busch
Year: 2008
Deal value: $52 billion
Industry: Beverage and brewing
InBev, a Belgium-Brazilian brewing company, made a hostile takeover bid to buy the American beer company Anheuser-Busch without its approval in 2008.
InBev initially offered $65 per share, valuing the deal at $46 billion, but Anheuser-Busch resisted the offer. This led to lawsuits and conflicts between the two companies. InBev even tried to replace Anheuser-Busch’s board to gain control.
Eventually, InBev raised its offer to $70 per share, increasing the deal’s value to $52 billion, which convinced shareholders to agree, and the takeover was finalized.
7. RBS and ABN Amro
Year: 2007
Deal value: $98 billion
Industry: Banking
The hostile takeover of ABN Amro by the Royal Bank of Scotland (RBS) in 2007 is considered one of the largest and most problematic acquisitions in banking history. RBS led a consortium with Santander and Fortis to outbid Barclays, eventually purchasing ABN Amro for about $98 billion. This acquisition was driven by competition with Barclays and a desire to expand globally. However, RBS conducted minimal due diligence, reportedly relying on only “two folders and a CD” which left it unprepared for the financial risks involved.
The deal occurred right before the 2008 financial crisis, which severely impacted RBS. The massive debt taken on for the acquisition and the global economic downturn resulted in significant losses for the bank. Eventually, RBS required a government bailout and has struggled to recover fully, now operating under the NatWest brand.
8. Oracle and PeopleSoft
Year: 2003
Deal value: $10.3 billion
Industry: Technology
The hostile takeover of PeopleSoft by Oracle began in 2003 when Oracle made an unsolicited offer to buy the software company for $16 per share.
PeopleSoft resisted, believing the offer undervalued the company, and even implemented a poison pill strategy to block the deal. Oracle persisted, increasing its bid multiple times over 18 months and launching a proxy battle to replace PeopleSoft’s board.
Finally, in 2004, PeopleSoft’s shareholders accepted Oracle’s offer of $26.50 per share, valuing the deal at $10.3 billion. The acquisition made Oracle a major player in the business software market.
9. AOL and Time Warner
Year: 2000
Deal value: $182 billion
Industry: Media and telecommunications
Although this disastrous deal doesn’t fit the classic definition of a hostile takeover, it’s often characterized as such due to the skeptical attitude of Time Warner’s board to the deal.
AOL moved to acquire Time Warner in 2000 for $182 billion on the back of the dot-com boom. However, the deal failed due to the subsequent dot-com crash, leading to a $98.7 billion loss for the combined company in 2002. Seven years later, Time Warner and AOL split. Eventually, AT&T bought Time Warner for $85 billion but later merged its WarnerMedia assets with Discovery in 2022, creating Warner Bros. Discovery. This deal is now seen as a lesson in overestimating tech-driven synergies.
10. Vodafone AirTouch and Mannesmann AG
Year: 1999
Deal value: $180 billion
Industry: Telecommunications
The hostile takeover between Vodafone AirTouch and Mannesmann AG in 1999-2000 was a landmark event in the telecommunications industry.
Vodafone, based in the UK, wanted to acquire Mannesmann, a German company, to create a global telecommunications giant. Mannesmann initially resisted Vodafone’s bid, with its management rejecting the offer.
Despite Mannesmann’s opposition, Vodafone bypassed management and appealed directly to shareholders with an improved offer. The persistence paid off, and Vodafone successfully acquired Mannesmann for approximately $180 billion, making it the largest hostile takeover in history at the time. This deal significantly expanded Vodafone’s global presence and marked a shift in European business culture, where hostile takeovers were previously rare.
Explore more of the biggest mergers and acquisitions examples for the past seven years in our dedicated article.
Lessons learned from hostile takeovers
Here are the lessons dealmakers can learn from these hostile business takeover examples:
- Persistence and adaptability
Success in hostile takeovers often requires persistence as well as flexibility in adjusting offers or strategies in response to resistance.
- Thorough due diligence
Proper research and understanding of the target company’s financial and operational risks are essential to avoid costly mistakes.
- Direct shareholders engagement
In the face of management reticence, appealing directly to shareholders with a strong value proposition can be key to securing support.
- Good timing and market conditions
Market timing plays a critical role in the success or failure of a takeover, especially when economic conditions can dramatically affect a deal’s outcome.
- Regulatory and legal challenges
Acquirers must navigate regulatory hurdles and anticipate legal challenges that could derail a deal, particularly in cross-border transactions or when government involvement is likely.
Explore conglomerate merger examples to learn how companies from different industries unite.
Key takeaways
- A hostile takeover occurs when an acquirer attempts to purchase the target company without the approval of its management and board.
- Some of the most recent famous hostile takeover examples are Elon Musk’s acquisition of Twitter and deals between JetBlue and Spirit Airlines.
- The biggest hostile takeovers are deals between AOL and Time Warner and Vodafone and Mannesmann AG.
- Some of the lessons to learn from hostile takeovers are to pinpoint the right timing and market conditions, conduct thorough due diligence, engage directly with shareholders, demonstrate persistence and adaptability, and pay attention to regulatory and legal challenges.
