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Please explain the definition of a hostile takeover

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Q. Could you explain what a hostile takeover actually is? Is it a request from Company A to Company B to purchase Company B? Is Company B always free to reject the offer? --Patrick Garmoe, reporter, Daily Herald (Suburban Chicago)

A. A hostile takeover is when Company A offers to buy Company B without there being an agreement between the two companies or Company B even wanting to be sold.

It's in contrast to a friendly acquisition, when the two companies sit down and negotiate a deal before it is announced.

From Investopedia: Hostile takeovers are usually bad news, as the employee moral of the target firm can quickly turn to animosity against the acquiring firm.

Company B is free to reject the offer, but Company A can go to the shareholders of Company B and put pressure on Company B. It can also offer to buy the stock directly from the shareholders without Company B's consent to try to force Company B's hand.

-- Chris Roush, assistant professor, University of North Carolina at Chapel Hill, former business reporter with The Atlanta Journal-Constitution

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