There are Two sorts of "Corporate Defences" against takeovers:
1. A defence team of merchant bankers, advisors and managers who clean up the company and make its share price increase so that it is too expensive for a raider to acquire.
2. A team of merchant bankers, advisors and managers who ensure that the share price will fall further if the current managers and Board controlling the company are removed - thus making the company too repellant for a raider to acquire. This method is termed the "poison pill" defence.
I was on the fringes of one such defence in 1985. An "entrepreneur" made a bid for Email Limited - a large manufaturer of white goods in Australia - Westinghouse, Frigidiare, Simpson, chef, Kelvinator, etc. etc. It was gradually going down the tubes thanks to over enthusiastic cost cutting and a complete lack of innovation.
The Entrepreneur made an on market bid for the princely sum of about $1.00 per share which the Board resisted.......
Then a little bird whispered something into the Entrepreneurs ear: - It was about the brands: The most important ones Frigidiare and Kelvinator were not actually owned by Email Ltd. they were foreign brands used subject to a "Gentlemens agreement" under which Email used the trade names in Australia. The "poison pill" was the intimation that the gentlemans agreement would be cancelled if the current Board and managment lost control of the company- which could have completely destroyed the companys refrigerator manufacturing business which was huge. In other words, there was a "cancellation on change of control" clause.
The Entrepreneur didn't raise his bid and sweated buckets until it expired.
The poor widows and orphans kept their shares in the company which eventually expired and was broken up in 2001 - having been a corporate basket case for another Fifteen years.
Now guess what sort of corporate defence the current Qantas Board and management will mount?
Last edited by Sunfish; 14th Jun 2012 at 21:27.