Fair price provision

(redirected from Fair-Price Amendment)

Fair price provision

Fair Price Provision

A provision in the bylaws of some publicly-traded companies stating that a company seeking to acquire it must pay a fair price to targeted shareholders. The formula for determining a fair price may be indicated in the bylaws; it is often a calculation based on historic prices. Additionally, the fair price provision mandates that the acquiring company must pay all shareholders the same amount per share in multi-tiered shares. The fair price provision exists both to protect shareholders and to discourage hostile acquisitions by making them more expensive. See also: Antitakeover measure.
References in periodicals archive ?
The fair-price amendment requires bidders to pay a "fair price" for all shares where fair price is often stated in terms of market price plus some premium, or some pre-determined multiple of the target firm's earnings per share.
Of these 99, 60 firms had either a non-financial effects or a fair-price amendment, but no poison pill.
Positive market reactions have been associated with the adoption of antitakeover devices believed to protect efficient management, such as fair-price amendments and non-financial-effects amendments.