Hostile takeovers represent one of the most complex and delicate dynamics in the world of mergers and acquisitions (M&A). A hostile acquisition occurs when a buyer attempts to take control of a company without the consent of the board of directors and against the will of management. In this context, directors play a crucial role, not only in managing the company but also in deciding how to defend against a potential hostile takeover. This article explores the role of directors in hostile takeovers, their responsibilities, defensive strategies that can be adopted, and the challenges they face.

The Role of Directors in Hostile Takeovers

Directors, as guardians of corporate governance, are responsible for protecting shareholders' interests and the continuity of the company. When a hostile acquisition threatens to compromise these interests, the board must carefully assess how to respond, deciding whether to defend the company's autonomy or accept the acquisition proposal. Their role in this process is multifaceted:

1. Evaluation of the Acquisition Proposal

The first task of the directors is to examine the buyer's offer, assessing whether the offered price is fair and aligned with the company's intrinsic value. The director must also consider the long-term implications of the acquisition, not only in financial terms but also in relation to the company's strategic goals, organizational culture, and sustainability.

2. Protection of Shareholders' Interests

Directors have a fiduciary duty to protect shareholders' interests. While the hostile acquisition may seem advantageous in terms of immediate returns (for example, a premium on the share price), it may not always be in the company’s best long-term interest. Therefore, the director’s task is to assess whether the company’s value is adequately represented in the acquisition offer and, if necessary, defend the market value of the company.

3. Communication with Shareholders

Once a hostile takeover has been identified, the board must communicate clearly with shareholders. This includes explaining the reasons why the acquisition is not in the company's best interest, how it would affect its future strategy, and how management intends to defend the company. Transparent communication is crucial for gaining shareholder support and preventing a "favorable vote" on the acquisition proposal.

Defensive Strategies Available to Directors

When a hostile acquisition arises, the board must decide whether and how to defend the company. Some of the most common defensive strategies adopted by directors include:

1. Poison pill

The poison pill is one of the most well-known and powerful defensive strategies. It is a mechanism that makes it less attractive for the acquirer to gain control of the company. For example, the company may allow existing shareholders to purchase shares at a discounted price if an acquirer reaches a significant percentage of shares, thereby diluting the acquirer's stake and increasing the acquisition cost.

2. Spin off

In some situations, directors may decide to split the company into multiple independent entities, making it more difficult to acquire a significant portion of the business. This process, known as a spin-off, can reduce the appeal of the company to the hostile acquirer, as the split complicates the management and valuation of the company.

3. White Knight

As an alternative to direct resistance, directors may seek a "white knight," which is another friendly buyer willing to make a purchase offer for the company, but on terms favorable to its shareholders. The intervention of a white knight can prevent the hostile acquisition and protect management and corporate culture.

4. Ad Hoc Shareholder Vote

Another strategy that directors can use is to seek shareholder support against the hostile acquisition. This may involve promoting an ad hoc vote on specific measures, such as amending the company’s bylaws, to block or delay the offer.

5. Stock Buyback

If financial resources allow, directors may decide to repurchase the company’s own shares on the market to prevent the hostile acquirer from gaining a significant stake. This strategy helps maintain control over the capital distribution and protect the company’s autonomy.

Challenges Faced by Directors

The decisions of directors in hostile takeovers are never easy and involve several challenges, including:

1. Balancing the interests of shareholders and management

Although directors are responsible for protecting shareholders, they may face conflicts of interest. For example, management may be motivated to defend their position within the company, while shareholders may prefer the offer from a hostile acquirer to achieve a quick return on their invested capital. This conflict must be managed carefully.

2. The risk of "entrenchment" (consolidation of power).

One of the most common criticisms of defensive strategies is that they can lead to "entrenchment" of management, meaning a resistance to change that protects the interests of management rather than those of shareholders. This can reduce the company’s ability to adapt to new market dynamics and decrease overall value.

3. Response from the shareholders.

Shareholders may disagree with the defenses adopted by the board and may attempt to take control of the company through legal action or other maneuvers. In some cases, shareholders may vote in favor of the hostile acquirer, believing that the acquisition would be beneficial for their financial return.

Ma, in definitiva, l’azione degli amministratori in una scalata ostile sono effettivamente dirette a difendere gli interessi degli azioniti?

WA