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 ?
"My body locked up so tight the least little thing'd send me off.
A SOLDIER who found his father dead at home kept the body locked in a room while he went on a spending spree with his bank cards.
The company's personal safety programme focuses on 'how to safely breakaway from strangle holds and body locks' and deal with 'biting, pinching, kicks, punches, head butts and groin attacks'.
Maybe because the fashion-perfect body locks the gaze, while the imperfect body allows the mind to wander and make metaphors of its flesh.
You need to keep moving otherwise your whole body locks and you're in trouble.
Customers are walked through the logical process of determining which housing, insert, cam, cut-out, and/or cam adapter may be required for standard or extended body locks in common finishes and how to select the correct part number to ensure the desired part is ordered.
When the outbreak finally did happen, Penny somehow became a zombie and when the Governor took charge of Woodbury, he kept her reanimated body locked up in a secret room.
HUNT: A team of volunteers, right, begins the long search for the body of Keith, who vanished in 1964 on the way to his gran's house That's all I want out of life now because I want him found before I die, and before Brady dies - Winnie Johnson, above, mother of Keith Bennett, left, on Saddleworth Moor, during a search for the boy's body LOCKED UP: A 1988 picture or Moors Murderer Ian Brady, above, who admitted killing Keith with accomplice Myra Hindley
Lillian Asplund, whose father and three brothers died, kept items recovered from dad Carl's body locked in her bureau.