Proxy Fight(redirected from Proxy Contests)
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Often used in risk arbitrage. Technique used by an acquiring company to attempt to gain control of a takeover target. The acquirer tries to persuade the shareholders of the target company that the present management of the firm should be ousted n favor of a slate of directors favorable to the acquirer, thus enabling the acquiring company to gain control of the company without paying a premium price.
A situation in which two investors (usually two companies) compete with one another in the attempt to gain the proxy votes of shareholders in a third company. The two investors engage in the proxy fight because both wish to have enough proxy to elect a new board of directors that will effectively do whatever the investor wants. The winner of a proxy fight, if any, is able to control the third company through the board of directors and does not need to directly acquire it, though many often do anyway.
A contest among two or more opposing forces to solicit stockholders' proxies and, in effect, to gain control of the firm through the election of directors. It is usually quite difficult to wrest control from the existing management through a proxy fight, but the tactic has been used, for example, by some suitors in takeover attempts.