macaroni defense

Macaroni defense

A tactic used by a corporation that is the target of a hostile takeover bid involving the issue of a large number of bonds that must be redeemed at a higher value if the company is taken over.

Macaroni Defense

An antitakeover measure in which a company issues a large number of bonds with the provision that they must be redeemed at a high price if the company is taken over. The macaroni defense expands the cost of a hostile takeover (just like macaroni expands when it cooks). However, it can make a friendly takeover more difficult.

macaroni defense

A defensive tactic against a hostile takeover in which the potential target company issues a large number of bonds that must be redeemed at a substantial premium to par in the event the company is taken over. The required redemption substantially expands the cost of a hostile takeover just as macaroni expands when placed in boiling water.