Famous Hostile Takeovers That Shaped Modern Business

A hostile takeover occurs when one company attempts to acquire another against the wishes of the target company's board of directors. This aggressive business move often involves bypassing management to appeal directly to shareholders or launching proxy battles to gain control.

Some of the most significant hostile takeovers in recent history include InBev's acquisition of Anheuser-Busch in 2008, Kraft Heinz Company's takeover of Cadbury in 2010, and Sanofi S.A.'s purchase of Genzyme Transgenics Corp. in 2011. These cases highlight the high-stakes tactics and defenses involved in such corporate battles.

Unlike friendly takeovers, where both companies collaborate on the acquisition, hostile takeovers are marked by resistance and strategic maneuvering from the target company.

Key Insights

• Hostile takeovers happen when the acquiring company proceeds despite opposition from the target company’s leadership.
• They contrast with friendly mergers, which involve mutual agreement and cooperation.
• Major hostile takeovers include Kraft Heinz's Cadbury acquisition (2010), InBev's takeover of Anheuser-Busch (2008), and Sanofi's purchase of Genzyme (2011).

Kraft Heinz and Cadbury: A $19 Billion Battle

In 2009, Kraft Heinz CEO Irene Rosenfeld announced a $16.3 billion bid to acquire Cadbury, the renowned British confectionery maker. The offer was initially rejected by Cadbury’s chairman, Sir Roger Carr, who assembled a defense team labeling the bid as undervalued and unwelcome. The UK government also voiced concerns, emphasizing the need to protect the iconic British brand.

Undeterred, Kraft increased its offer to approximately $19.6 billion in 2010. After intense negotiations and public debate, Cadbury agreed to the acquisition for $18.9 billion. This contentious deal led to reforms in UK takeover regulations, emphasizing transparency and safeguarding national interests.

Post-acquisition, Kraft Heinz split into two entities: Mondelēz International, which now owns Cadbury and focuses on global snacks, and Kraft Foods Group.

InBev’s $52 Billion Takeover of Anheuser-Busch

In 2008, InBev launched an unsolicited bid for Anheuser-Busch, offering $65 per share, valuing the company at $46 billion. The takeover quickly escalated into a hostile battle featuring lawsuits and proxy fights. InBev sought to replace Anheuser-Busch's board to gain control, leading to internal family disputes within the Busch dynasty.

Ultimately, InBev raised its offer to $70 per share, totaling $52 billion, convincing shareholders to accept. The merger created Anheuser-Busch InBev, which later merged with SABMiller in 2016 in a $104.3 billion deal, further consolidating the global beer market.

Note

Corporate raiders often use hostile takeovers to acquire undervalued companies, aiming to restructure or sell assets for profit.

Sanofi’s Strategic Acquisition of Genzyme

In 2010, French pharmaceutical giant Sanofi SA targeted Genzyme Transgenics Corp., an American biotech firm known for developing treatments for rare genetic disorders. After friendly acquisition offers were rejected, Sanofi pursued a hostile takeover by directly courting Genzyme’s major shareholders.

This approach succeeded, and nine months later, Sanofi completed a $20.1 billion cash acquisition. To sweeten the deal, shareholders received contingent value rights worth up to $14 each, tied to the approval and sales of Genzyme’s drug Lemtrada.

However, in 2019, Sanofi settled for $315 million after allegations surfaced that it undermined Lemtrada’s FDA approval process to reduce CVR payouts.

How Hostile Takeovers Unfold

A hostile takeover typically involves acquiring a majority of voting shares without consent from the target company’s management. This often includes direct offers to shareholders or proxy battles to replace management.

Common Defenses Against Hostile Takeovers

Target companies may deploy various tactics to fend off unwanted acquisitions, such as:

• Crown jewel defense (selling valuable assets)
• Differential voting rights to limit control
• Employee stock ownership programs (ESOPs)
• Golden parachutes for executives
• Pac-Man defense (counter-bidding for the acquirer)
• Poison pill strategies to dilute shares

Hostile Takeovers in Popular Culture

Hostile takeovers have inspired plots in films like "Wall Street" (1987) and "Other People’s Money" (1991), reflecting their dramatic impact on business and society.

Conclusion

Hostile takeovers represent aggressive acquisition strategies where one company seeks control despite opposition from the target’s leadership. Notable examples like Kraft Heinz’s Cadbury acquisition, InBev’s takeover of Anheuser-Busch, and Sanofi’s purchase of Genzyme demonstrate the complexities and high stakes involved. Understanding these cases provides valuable insights into corporate strategy and market dynamics.

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