macaroni defense


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

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

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.
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.