Case breakdown: Movie Baazigar
Tha above scene is from the movie Baazigar. It shows Vicky/ Ajay Sharma (Shahrukh Khan) telling Chopra (played by Dilip Tahil) that he has taken over his company. The company would now be called as ‘Sharma group of companies’. He mentions that history is repeating itself and similar to how he took this company from his father, he is doing the same thing.
In this blog, learning Perspectives will explore the meaning of a hostile takeover.
What is a Hostile takeover?
Not all mergers and acquisition are friendly and peaceful. In this movie, Shah Rukh Khan takes control of the management by purchasing all the shares without the knowledge of the management. This is known as Hostile takeover. Although, power of attorney too plays a major role in this movie, but that will be discussed in another blog.
Hostile takeover takes place when the acquiring company wishes to takeover the target company against the will of the target company. Similar to the scene shown, hostile takeover is a bid to take control of the target company without the knowledge of the board of directors. Target company is motivated to do this, to acquire the company’s brand, their stronghold in the market, their technology etc.. Target company can resort to defensive strategies.
Poison Pill Strategy is one of the most effective way to defend against hostile takeover.
Just like a poison pill which must be very difficult to swallow, the company that is being taken over would make their shares extremely unattractive to the firm that is trying to acquire the company. Clearly, this did not happen in Baazigar.
Sharukh Khan is feeling so smug that he is wearing sunglasses indoors and became king of the company without Chopra swallowing the poison pill. 🙂
Big Bazaar or the Future retail group stores were forcefully taken over by Reliance retail (RIL) on 15th March 2022. This was a case of a hostile takeover. These stores were the crown jewels for RIL.