Reuters – Hostile and unsolicited takeover activity has run rampant lately, and buyers who are getting in on the action may want to draft thank-you notes to their favorite hedge funds for helping tostir the waters.
Last year was the busiest year since 2001 for unsolicited bids worldwide, and merger experts peg the heavy activity to several factors.
With the M&A boom now in its middle stages, many of the long talked-about and friendly deals, like Procter & Gamble’s (PG.N: Quote, Profile, Research) acquisition of Gillette, have already closed.
Mergers that span industries or explore new strategies are still largely taboo. But after several years in lock-down mode, corporate chiefs are more aggressively stalking rivals from their own industries that pose “perfect fits.” And the strong debt markets have made that aggression affordable.
The stigma against hostile bids that was prevalent in the 1980s and 1990s has also dissipated. There’s even a new set of semantics as takeover offers once called “hostile” are now “unilateral,” and Wall Street’s former “vulture investors” and “corporate raiders” have become known as “activists.”
But without the market’s increasingly receptive audience of hedge fund shareholders, executives might be less likely to put themselves on the line to win prized assets.
“Having activist shareholders out there really does embolden the aggressors because they know that when they make a hostile bid, they may be able to get more assistance from shareholders who flow into the stock than they had in the past,” said Jim Stynes, vice chairman of mergers and acquisitions in the Americas for Deutsche Bank.
Nearly $108 billion in hostile or unsolicited bids were logged worldwide in 2005, almost reaching the $110 billion of 2001. Cross-border activity was particularly heavy.
