defensive acquisition

Defensive Acquisition

The act of firms acquiring other firms and assets for the purpose of defending against market downturns or possible takeovers.

Notes:

An example of a defensive acquisition strategy is a company's purchase of similar but smaller firms. This prevents takeovers through anti-trust laws as a merger between the target firm--which just acquired smaller but similar firms--and the acquiring firm may result in the creation of a monopoly.

An example of a defensive strategy through the purchase of assets is a North American car company acquiring an SUV company due to the projected rise in demand for SUVs.

See also: Acquisition, Anti-Trust, Asset, Merger, Monopoly, Poison Pill, Takeover

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defensive acquisition

A firm or an asset purchased by a potential target of a takeover in order to make itself less desirable to raiders. For example, a target company might purchase another firm engaged in the same business as the raider in order to create an antitrust problem for the raider. See also raider, target company.