Unfriendly takeover efforts grow in number, size

ByABC News
March 3, 2008, 11:08 PM

— -- Corporate let's make a deal is increasingly becoming an unfriendly affair.

Such so-called hostile buyout offers are gaining in popularity as corporate buyers lose their patience and are no longer willing to take no for an answer.

So far this year, there have been 13 hostile and unsolicited takeover offers, which is double last year and the most hostile bids this early in a year since the 19 in 1991, says Richard Peterson of Thomson Financial.

"You have a disconnect between buyers and sellers," says Bob Filek of PricewaterhouseCoopers. "You don't have willing sellers yet, but interest from buyers who see opportunities."

There are several reasons buyers are increasingly attempting to force the hands of unwilling sellers, including:

Stock market troubles. Prices of buyout targets have fallen, often more than the targets realize, says John Babala, partner at law firm Dreier Stein Kahan Browne Woods George. Although the broad stock market recovered Monday after flirting with a new low for the year, the Dow Jones industrial average has lost 435 points in three days and is down 7.6% this year. "There are prime targets for hostile" deals, he says.

Shareholder activism. Investors tired of waiting for a company to get its strategic plan together are seeking new management or a suitor they think can, says Bill Seabaugh of law firm Bryan Cave. Big investors are increasingly looking to hostile takeovers as a way to force out ineffective management, says Ric Marshall, chief analyst at corporate watchdog The Corporate Library. "Sometimes management needs to be shown the door," he says.