Business

8 Basic Steps To Rejecting A Hostile Takeover Offer

On the heels of Time Warner’s rejection of an unsolicited takeover bid from Rupert Murdoch’s 21st Century Fox, here’s a look at how companies politely tell potential buyers to get lost.

1. Begin by stating your “careful evaluation” of the proposal in question.

“The Men’s Wearhouse today announced that its Board of Directors, after careful evaluation with the assistance of its financial and legal advisors, has determined to reject an unsolicited, non-binding proposal from Jos. A. Bank.”
Men’s Wearhouse
October 9, 2013

“After a comprehensive review, conducted in consultation with its financial and legal advisors, the Allergan Board concluded…”
Allergan
May 12, 2014

“After carefully reviewing your offer with our financial and legal advisors, we continue to believe that your offer to acquire Jos. A. Bank…”
Jos. A. Bank
February 2, 2014

2. But be sure to throw some shade right away.

“Time Warner Cable Inc. said today that its Board of Directors has unanimously rejected a third grossly inadequate proposal from Charter Communications to acquire TWC. The proposal was described only generally in a letter received today from Charter as being in the ‘low $130s.’”
Time Warner Cable
January 13, 2014

“We are confident that we can achieve total shareholder returns well in excess of what can be derived from Jos. A. Bank’s unsolicited and inadequate proposal.”
— Men’s Wearhouse
October 9, 2013

“Darden strongly believes that Starboard’s special meeting is an unsatisfactory alternative to direct, ongoing engagement between the Company and its shareholders regarding the Company’s strategic direction and other matters of interest to shareholders.”
Darden to Starboard Value
March 19, 2014

“[The Cadbury board]emphatically rejected this derisory offer.”
Cardbury to Kraft
November 10, 2009

3. Determine whether the offer “significantly” or “substantially” undervalues your company.

“First and foremost, it substantially undervalues TWC and would represent an EBITDA multiple of approximately 7X, well below past transactions in the cable sector.”
— Time Warner Cable to Charter
January 13, 2014

“After careful review and consideration, our Board of Directors has unanimously determined that Valeant’s unsolicited proposal substantially undervalues Allergan.”
Allergan
May 12, 2014

“The Men’s Wearhouse Board believes that Jos. A. Bank’s proposal significantly undervalues Men’s Wearhouse.”
— Men’s Wearhouse
October 9, 2013

“As you may be aware, Endurance Specialty Holdings Ltd. recently became a shareholder of your Company and has filed a solicitation statement seeking shareholder support for certain tactics intended to facilitate its unsolicited offer to acquire all of the outstanding shares of Aspen Insurance Holdings Limited in exchange for consideration that the Aspen board of directors has repeatedly and unanimously determined significantly undervalues Aspen.”
Aspen Health Insurance
June 27, 2013

4. Make sure everyone knows how risky this would be.

“There is significant risk and uncertainty as to the valuation of Twenty-First Century Fox’s non-voting stock and Twenty-First Century Fox’s ability to govern and manage a combination of the size and scale of Twenty-First Century Fox and Time Warner; and there are considerable strategic, operational, and regulatory risks to executing a combination with Twenty-First Century Fox.”
Time Warner
July 16, 2014

“Furthermore, the Board has determined that Valeant’s proposal creates significant risks and uncertainties for Allergan’s stockholders and believes that the Valeant business model is not sustainable.”
— Allergan
May 12, 2014

“We believe Jos. A. Bank’s unsolicited proposal is opportunistic, subject to unacceptable risks and contingencies, and would deprive our shareholders of the value inherent in Men’s Wearhouse for inadequate consideration.”
— Men’s Wearhouse
October 9, 2013

“We have rejected Pfizer’s final proposal because it is inadequate and would present significant risks for shareholders, while also having serious consequences for the company, our employees and the life-sciences sector in the UK, Sweden and the US.”
Astrazeneca
May 19, 2014

5. And really, you were JUST FINE as you were.

“As the leading men’s specialty retailer in North America, with sales of approximately $2.5 billion in the last twelve months, Men’s Wearhouse has a valuable market position that provides compelling opportunities to expand customer offerings and grow revenues and profits. Men’s Wearhouse has more than 2x the sales of Jos. A. Bank, its next largest competitor. In addition, the Company has consistently delivered positive same store sales and margin expansion over the last three years.”
— Men’s Wearhouse
October 9, 2013

“The Company also announced that, given the strength in its business, Allergan expects to increase earnings per share by 20 to 25 percent and continue to generate double digit revenue growth in 2015. Additionally, the Company expects to produce double digit sales growth and produce earnings per share compounded annual growth of 20 percent over the next five years.”
— Allergan
May 12, 2014

“Time Warner’s Board also noted the consistent track record of Time Warner’s proven management team in achieving superior returns as well as completing a series of transactions to unlock value in related businesses, including the separation of AOL, Time Warner Cable, and Time Inc. Under its strategic plan, Time Warner has delivered a total shareholder return of more than 150% since 2008, almost tripling the return of the S&P 500 over the same period, as management has pursued a disciplined approach to position the Company as a global leader in media and entertainment while managing its operations and capital structure to maximize shareholder returns.”
— Time Warner to 21st Century Fox
July 16, 2014

6. Because you are a very special company. A unique company. A snowflake, really.

“The board is confident in Cadbury’s standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope.”
Cadbury to Kraft
September 7, 2009

“The unique value of Time Warner’s industry-leading businesses including its portfolio of networks and its film studio and television production business is only going to increase.”
— Time Warner to 21st Century Fox
July 16, 2014

“We are confident in our ability to extend our strong track record of innovation, which has yielded unique expertise and insights that drive innovation and value.”
— Allergan to Valleant
May 14, 2014

“Our shareholders deserve to realize that value and benefit from the unique position of the company.”
— Time Warner Cable to Charter
January 13, 2014

7. And after all, your truest and most earnest pursuit is to maximize shareholder value.

“Jos. A. Bank’s entire Board is focused on one thing: pursuing a strategic plan that drives stockholder value.”
— Jos. A. Bank to Men’s Wearhouse
February 2, 2014

“Management has pursued a disciplined approach to position the Company as a global leader in media and entertainment while managing its operations and capital structure to maximize shareholder returns.”
— Time Warner to 21st Century Fox
July 16, 2014

“The Board is determined to continue to create value for Allergan and its stockholders.”
— Allergan to Valeant
May 12, 2014

8. You Just. Love. Shareholders.

“The Men’s Wearhouse Board of Directors is resolutely committed to preserving and enhancing value for Men’s Wearhouse shareholders and will vigorously protect shareholders against grossly undervalued and opportunistic proposals.”
— Men’s Wearhouse to Jos. A. Bank
October 9, 2013

“Our shareholders deserve to realize that value and benefit from the unique position of the company. Our job above all is to act in the best interests of our shareholders.”
—Time Warner to Charter
January 13, 2014

Thanks but no thanks, potential acquirer. Bye.

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