bear hug

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Bear hug

Often used in risk arbitrage. Hostile takeover attempt in which the acquirer offers an exceptionally large premium over the market value of the acquiree's shares so as to as to squeeze (hug) the target into acceptance.

Bear Hug

An offer by a company to buy another company for a price per share far above the share price's fair market value. A company offers a bear hug when it believes the target company's management may decline the offer. Because the management has a fiduciary responsibility to act in the best interest of shareholders, the bear hug is essentially an offer the management cannot refuse, at least not without exposing itself to a lawsuit. It is a form of a hostile takeover and may be used as a form of risk arbitrage.

bear hug

A buyout offer so favorable to stockholders of a company targeted for acquisition that there is little likelihood they will refuse the offer. Not only does a bear hug offer a price significantly above the market price of the target company's stock, but it is likely to offer cash payments as well. See also takeover.
Case Study Following rejection by the General Motors board of an EchoStar Communications takeover proposal for GM-controlled Hughes Electronics, owner of DirectTV, EchoStar soon made another surprise bid to acquire Hughes. At the time of the bid Hughes's equity was trading on the New York Stock Exchange as a tracking stock. The second bid, announced with a public letter addressed to the GM board, was a bear hug offer made directly to Hughes's stockholders. Believing that General Motors directors were likely to recommend a sale of Hughes to Rupert Murdoch's News Corp., EchoStar felt it could only be successful by offering a higher price to Hughes's shareholders. The higher price would appeal to Hughes's shareholders and make it more difficult for GM directors to recommend a sale at a lower price to another company. GM directors rejected the earlier EchoStar offer in part because they felt the combination of DirectTV and EchoStar would be unacceptable on an antitrust basis. Rupert Murdoch later pulled out of the bidding for Hughes.
References in periodicals archive ?
Clark noted, "We are thrilled to be able to celebrate this beary special milestone with our Guests, and are looking forward to spreading even more teddy bear hugs throughout the world during the next ten years.
To celebrate the launch of Champ and kick-off the Build-A-Bear Workshop Bear Hugs Foundation, Build-A-Bear Workshop will be making an initial grant of $20,000 to children's health and wellness groups across the country.
Our international growth has proven that a teddy bear hug is understood in any language.
The smallest victims of the hurricane do not know what tomorrow will hold," said Kelly Swords, co-founder of Bear Hugs With Love.
The Company will take a formal family portrait of bears and their people (and take a shot at breaking the Guinness Book of World Records) and "Teddy", the Company's full sized mascot will give Bear Hugs on demand and pose for photos.
Patrick and I had a competition at the end to see who could give out the best bear hug - well, of course, I won that one, paws down
I would like to thank this little boy, whoever you are, for your kind words and don't forget, if you see me in town come and give me a big bear hug.