Standstill agreement

Contract by which the bidding firm in a takeover attempt agrees to limit its holdings of another firm.

Standstill Agreement

An agreement between a target company and a potential hostile acquirer whereby the acquirer agrees not to buy any more of the target company in exchange for some compensation. The compensation may be monetary; that is, the company can simply buy off the acquirer. More commonly, it involves some other incentive such as a seat on the board of directors or an agreement for the company to repurchase its own stock, which would increase the value of the shares the acquirer already owns. A standstill agreement has an expiration date after which the acquirer can continue buying the company if it wishes, but the time in between gives the target company time to form a more effective antitakeover strategy.

standstill agreement

A written agreement between two firms whereby the actions of one firm with respect to the other are limited until a specified date. For example, Firm A may sell Firm B a block of Firm A's stock with the stipulation that Firm B will acquire no additional shares in Firm A for five years.

Case Study In February 1996, the Chrysler Corporation reached a standstill agreement with dissident stockholder Kirk Kerkorian. Over several years, Kerkorian had accumulated nearly 13.6% of Chrysler's common stock in an unsuccessful takeover attempt. At the time of the agreement, the investor was threatening Chrysler management with a proxy fight. As part of the standstill agreement, Kerkorian said he would not accumulate additional Chrysler shares, not attempt a hostile takeover, and not launch a proxy fight for a period of five years. In turn, Chrysler management agreed to give a board seat to a Kerkorian ally. The firm also agreed to double the size of its planned 1996 share-repurchase program to $2 billion and to repurchase an additional $1 billion of Chrysler shares the following year. The standstill agreement rewarded Kerkorian with a boost in the value of his Chrysler shares, and at the same time it permitted Chrysler's management to eliminate a problem that was consuming substantial amounts of the firm's time and resources.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

References in periodicals archive

In order to impress the residents of the region, Pakistani and compliant media has been shedding crocodile tears on plight of the people of Jammu and Kashmir, yet ignoring the fact that it was Islamabad which had violated the Standstill Agreement and attacked Jammu and Kashmir with intention to occupy it because Maharaja Singh refused to sign on the dotted line, Choudhry wrote in his blog.

'Pak shedding crocodile tears over J-K is worth exposing'

As a condition of the standstill agreement, LOG has been given the right to a board observer.

Atlantic Petroleum announces signing of DKK5m bridge loan facility and standstill agreements

The 'C' IDR reflects the fact that Astaldi is entering into a standstill agreement.

Fitch Downgrades Astaldi to 'C' on Creditor Protection Application

According to the original standstill agreement signed in 2017, the Atlas boss had "to enter into a restructuring agreement satisfactory to lenders" by October 9, 2017.

Atlas boss has to submit repayment plan by July 5

"Elliott is pleased to have entered into today's standstill agreement with AkzoNobel.

AkzoNobel Reaches Agreement with Elliott

approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a potential combination through a merger of Max Life Insurance Company Ltd and Max Financial Services Ltd into HDFC Life by way of a scheme of arrangement," HDFC said in a NSE filing.

MAX LIFE, MAX FIN SERVICES TO MERGE INTO HDFC STANDARD LIFE INSURANCE

"The negotiations are in advanced stage and a three-year standstill agreement may be signed within next one to two months.

Tunisia: TAV renegotiating its concession agreement terms

The Mexican company ended in July a standstill agreement it had with KPN, allowing it to boost its stake in KPN over 30%.

America Movil secures debt financing for KPN bid

In this regard Standstill agreement offered by Maharaja Hari Singh and accepted by Pakistan is another most relevant document to be considered.

Attique suggests AJK, GB, IHK assemblies meet for Kashmir settlement

Dana Gas reached a so-called standstill agreement earlier this month, a person familiar with the plan said on Tuesday, asking not to be identified because the information is private.

Dana Gas set to extend $1b Islamic bonds maturity