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 ?
Elliott is pleased to have entered into today's standstill agreement with AkzoNobel.
The retailer, which runs more than 400 outlets across the region, first reached the standstill agreement with creditor banks in March as it continued to work on a restructuring plan.
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.
Intellectual property company MOSAID Technologies Inc (TSX:MSD) announced on Monday it has entered into an 19-day standstill agreement with consumer electronics company Samsung Electronics Co Ltd.
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.
The Investment Dar (TID) has entered into a standstill agreement with the members of the coordinating committee of TID's banks and investors and investor clients of The Investment Dar Bank.
A standstill agreement with lenders expired on Monday, but JJB said it had been granted breathing space until March 24, subject to the banks remaining satisfied with the progress of the proposed disposal.
THE future of Leeds United remained uncertain today after the club's creditors refused to sanction a further extension to the standstill agreement.
placed the company in the hands of voluntary administrators after the debt-laden company failed to secure a six-month standstill agreement from its bankers.
After a temporary restraining order was imposed on Z's takeover attempt, X and Z entered into a settlement and standstill agreement under which X agreed to pay Z for the repurchase of X's stock, and to reimburse Z for amounts incurred in connection with the tender offer.