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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
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 ?
They were going to lay a bearhug letter on Company X the next morning.
never goes having a really is worst " Designed by artist Rob Bannon and director of wild in art, Charlie Langhorne, Bearhug has now joined his furry friends on The Big Sleuth trail at New Street Station
BluMagnum has the BearHug patterns and now provides the same basic grips too.
A telephone, money and other items were taken from the highlyrated tea house but the Bearhug Company - located directly above the cafe -was the worst hit.
Julian Siegel Urban Theme Park: This music just envelops the listener with a big bearhug. I think it has something to do not only with the individual musicianship but it has to do with the equally impossible to explain energy and joy that is created communally by these four musicians.
Reusch admitted to police that he threw Cody Riekstins to the ground after holding him in a bearhug while his friends continued to punch and kick him in the face and body.
Did Mr deMenezes stand up before he was grabbed in a bearhug by officer Ivor?
He received a joyous, bearhug embrace from John Fisher, the proud foster dad who took him under his wing when he was a traumatised refugee.
A drained but delighted Graeme Souness grabbed his personal team of Dean Saunders, Alan Murray and Terry McDermott in an emotional bearhug of joy in front of United's dug-out as 50,000 Geordies roared their relief and celebration at an ebb-and-flow 3-2 victory.
``I walked in, Ron gave me a big bearhug and said, `We've won'.
SHORTLISTED FINALIST The BearHug Co THE BearHug Co Ltd is certainly at the very art of the community.
In the early days, pugilists could bearhug, even slam their opponents to the ground.