Lockup option

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Lockup option

Often used in risk arbitrage. Privilege offered a white knight (friendly acquirer) by a target company to buy crown jewels or additional equity. The aim is to discourage a hostile takeover. See: Shark repellent.

Lockup Option

An antitakeover measure in which a target company offers stock options to a white knight to purchase a great deal of equity in the company at a price that would be disadvantageous to a potential acquiring company. This is designed to encourage the potential acquiring company to abandon a hostile takeover attempt. It is also called a lock-up defense.
References in periodicals archive ?
If the Board of Directors really intends to sell the company, then they should make a statement that there will be a clean auction process with no `sweetheart' deals, no lockup options, no breakup fees, or other schemes that would affect a `level playing field' for all interested parties.