A bear hug is an informal offer to acquire a company at a premium to the market price of its shares, made public without the consent of its board.
Bear hugs rely on the fact that the shareholders of the company will put pressure on the board to accept the proposed terms or start negotiations with the offeror.
If the target company refuses to accept the bear hug, it risks being prosecuted or challenged in board elections.
Without a tender offer for outstanding shares, a bear hug is no guarantee that a bidder will buy the company at the stated price.
Acquisition premium is the difference between the estimated real value of a company and the actual price paid for its acquisition in an M&A transaction.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.
Back integration is when a company expands its role to perform tasks that were previously performed by enterprises located higher up in the supply chain.
Share capital is the number of ordinary and preferred shares that the company has the right to issue and which are accounted for on the balance sheet as part of share capital.
As a result of the spin-off, the parent company sells a portion of its shares in its subsidiary to the public through an initial public offering (IPO), effectively turning the subsidiary into a stand-alone company.