Bear Hug Takeover Strategy

“Our plan was to grab Hartford in a “bear hug.” This is a common Wall Street carrot-and-stick approach: large blocks of stock are purchased from shareholders; and then this “carrot” is promptly followed with a decidedly more menacing offer to the board to purchase a controlling interest of the company’s shares at a price substantially over the market. It’s a carefully orchestrated technique: the attention-grabbing offer is made in a formal letter to the board, and next there’s an immediate public disclosure of the terms. Theoretically, the announcement that the target company is “in play” will result in a huge turnover of its stock. The biggest buyers will be professional traders, or arbitrageurs, and they will greedily pressure the board either to approve the deal or to search out a richer one. Under constant attack, and with the happy prospect that their own piles of stock as well as those of their shareholders will suddenly be worth incrementally more, the board will simply throw up its hands in pragmatic surrender, resigned to suffering through an unwanted but lucrative takeover. Or at least that was how our “bear hug” strategy played out in our hopeful minds.”