standstill agreement

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Related to standstill agreement: Targeted repurchase

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.
References in periodicals archive ?
Extension of the standstill period by committing further funds necessary to fund MMB operations during such extension and as agreed with MMB's lenders, and this option is under the current standstill agreement.
The Standstill Agreement also restricts sales by Leucadia to counterparties who hold, or after giving effect to a sale would hold, in excess of 4.
This is the second time the embattled jewellery group was extending the standstill agreement since reaching an accord with creditors in March.
In the event that the financial restructuring plan is not signed as envisaged or the standstill agreement is not extended further, there could be significant uncertainty over the ability of the group to continue operating as a going concern," said Ernst & Young, in a letter published on the bourse's website.
Wind Hellas said on July 1 it had a standstill agreement from creditors to defer until Nov.
It was not clear from the statement, posted by Investment Dar Sukuk on the Bahrain stock exchange, whether this means that Dar's standstill agreement which was supposed to run until the end of 2009, had also been extended, according to a report in our sister newspaper Gulf Daily News.
The standstill agreement is expected to run until December 31.
TID said the principle of the Standstill Agreement "broadly rests on the company's commitment to a variety of undertakings to the consenting banks and investors, including the appointment of a Chief Restructuring Officer, on the basis of which, the consenting banks and investors will, for the duration of the Standstill Agreement, suspend individual claims relating to investment arrangements entered into with the company, amongst committing to other undertakings to the company.
The new standstill agreement with WL Ross increases the percentage of EXCO's outstanding common shares that WL Ross can beneficially own to 20% from the approximately 10% effectively allowed under the original confidentiality agreement.
The Investment Dar (TID) announced that the coordinating committee of TID's banks and investors have agreed to extend the milestone dates in the standstill agreement.
As part of the standstill agreement, Investment Dar has vowed to complete "a variety of undertakings to the consenting banks and investors, including the appointment of a chief restructuring officer.
announces that it has entered into a standstill agreement ("Standstill Agreement") with the members of the coordinating committee ("Coordinating Committee") of TID's banks and investors ("Banks and Investors") and investor clients of The Investment Dar Bank.