Unsolicited Take-Over Bid Defensive Measures

Unsolicited Take-Over Bid Defensive Measures

See Chinese version below [中文版参阅下文].

Given the recent market downturns caused by the COVID-19 crisis, widely-held public companies with a depressed share price may become vulnerable to an unsolicited take-over bid. In this series of articles, we will explore different measures that a public company can take in anticipation or in response to such unsolicited bid.

Although a full discussion of the possible defensive measures that are available in Canada is beyond the scope of this blog series, we would like to introduce a few options available to public companies. These options include : (1) finding another buyer who would make a competing proposal (commonly referred to as a “white knight”), (2) implementing a shareholder rights plan, and (3) issuing equity to friendly third parties.

Find a White Knight 

The first option is to look for a “white knight” to make a competing, and hopefully superior, proposal. If a competing superior proposal is found, the board of directors of the target company may consider it to be in the best interests of the company and its shareholders to enter into a support agreement with the second bidder making the superior proposal. That would mean the second bidder proceeds with the benefit of a recommendation in favour of its transaction from the target company’s board and, perhaps more importantly, the benefit of a break fee and a right to match if the first bidder comes back with an improved offer. There have been many transactions in Canada where a hostile bidder lost out to a subsequent white knight that had the advantages conferred by a support agreement with the target company.

恶意收购防护措施

近期的新冠疫情导致的股市低迷使一些股价低于正常水平的上市公司成为恶意收购目标。在这一系列文章中，我们将探讨上市公司在回应此类收购时可以采取的不同措施。本系列文章虽然不对所有在加拿大可能采取的防护措施进行全面讨论，我们想向大家介绍以下几种措施：（1）寻找能够提出更优越的报价的收购方 （通常称为“白衣骑士”）, (2) 实行股东权利计划和 (3)向善意第三方发行股份。

找到白衣骑士

第一种防护措施是找一位“白衣骑士”作为收购方提出与现有收购提案相竞争并且更优越的收购提案。如果新的收购提案更有优势，那么目标公司的董事会可以认为该提案符合公司和其股东的最佳利益，并与新的收购方订立支持协议。这就会意味着新的收购方可在目标公司董事会同意其交易的有利条件下进行收购，也许更重要的是，如果第一位收购方又回来提出一个更优越的要约收购提案，则有终止费和匹配权。加拿大有许多这样的交易，其中恶意收购方败于后来居上的白衣骑士，因为后者存在目标公司所授予支持协议的有利条件。