Publications

October 2007 (Revised December 2008)
Background Note

Evaluating M&A Deals: How Poison Pills Work

By: Carliss Y. Baldwin

The poison pill defense against hostile takeovers was invented in 1982 by Martin Lipton, of Wachtell, Lipton, Rosen and Katz. Pills are considered the most effective of all the normal defenses against a hostile bidder. Describes the two basic types of poison pills... View Details

Keywords: Negotiation Deal; Mergers and Acquisitions

March 2001 (Revised December 2003)
Case

Circon (A)

By: Brian J. Hall, Guhan Subramanian and Christopher A Rose

In 1996, U.S. Surgical launched a hostile takeover bid against Circon Corp. After building the company for 20 years, CEO Richard Auhll takes a defensive stand that includes inviting an old HBS friend (George Cloutier) to join the fight as a director of Circon. A... View Details

Keywords: Motivation and Incentives; Corporate Governance; Medical Devices and Supplies Industry; United States

October 1998 (Revised January 1999)
Case

Echlin vs. SPX

By: Paul M. Healy, Bjorn N. Jorgensen and Penny Joseph

Echlin has received a hostile takeover offer from SPX. Both companies have been undertaking major restructurings, and Echlin's shareholders face a difficult decision of whether to support current management or sell out to SPX. Students are asked to analyze the two... View Details

Keywords: Acquisition; Financial Statements; Business and Shareholder Relations

November 2010
Article

A New Era for Raiders

By: Guhan Subramanian

The article presents information on corporate methods of preventing hostile takeovers by corporate raiders, such as the poison pill strategy. It is noted that some of these techniques have become less popular and effective. An argument is presented that Section 203 of... View Details

Keywords: Strategy; Mergers and Acquisitions; United States

March 2009 (Revised September 2010)
Case

HOYA Corporation (A)

By: W. Carl Kester and Masako Egawa

In 2007, HOYA of Japan must decide whether to change its friendly exchange offer for Pentax into a hostile cash tender offer. A surprising sequence of events had caused a friendly merger agreement to fall apart, resulting in a boardroom coup at Pentax and the... View Details

Keywords: Mergers and Acquisitions; Investment Activism; Corporate Governance; Governance Controls; Governing and Advisory Boards; Negotiation Tactics; Business and Shareholder Relations; Valuation; Japan

December 1999 (Revised April 2000)
Case

Franco Bernabe: Reflections on Telecom Italia (A)

By: Linda A. Hill and Kristin Doughty

In November 1998, Franco Bernabe left ENI to become CEO of Telecom Italia, Italy's primary telecommunications provider. Three months later, Roberto Colaninno, CEO of Olivetti SpA, an Italian computer and telecom company one fifth the size of Telecom Italia, launched a... View Details

Keywords: Management Teams; Mergers and Acquisitions; Planning; Telecommunications Industry; Italy

January 2006 (Revised July 2016)
Case

Gordon Bethune at Continental Airlines

By: Nitin Nohria, Anthony Mayo and Mark Benson

A $385 million loss for the final months of fiscal year 1994 signaled Continental might go bankrupt. Could new CEO Gordon Bethune turn Continental around? Continental was in dire straits because the deregulation of the commercial airline industry in 1978 ushered in a... View Details

Keywords: Transformation; Insolvency and Bankruptcy; Profit; Leading Change; Organizational Change and Adaptation; Performance Improvement; Labor and Management Relations; Air Transportation Industry

July 1990 (Revised August 1990)
Case

Kaiser Steel Corporation, 1950

By: Timothy A. Luehrman and William Schiano

Examines Kaiser Steel's initial equity offering in 1950. The first case in a sequence that will trace the history of corporate restructurings that occurred 30 to 40 years later, in the 1980s. Subsequent cases examine foreign competition and labor unrest, hostile... View Details

Keywords: Business History; Competition; Initial Public Offering; Capital Structure; Restructuring; Capital Markets; Ownership; Steel Industry; United States

January 1997
Case

Dr. Sergio Ceccuzzi and SMI: Negotiating Cross-Border Acquisitions in Europe (B)

By: James K. Sebenius

Since the 1960s, SMI has quietly executed a series of brilliantly negotiated takeovers throughout Europe, often acquiring companies much larger than itself. Despite formidable obstacles, SMI has managed to acquire state-owned competitors in Italy and France, as well as... View Details

Keywords: Acquisition; Corporate Governance; International Relations; Negotiation Tactics; Consolidation; Mining Industry; Europe

October 2007 (Revised July 2016)
Teaching Note

Gordon Bethune at Continental Airlines

By: Anthony J. Mayo

A $385 million loss for the final months of fiscal year 1994 signaled Continental might go bankrupt. Could new CEO Gordon Bethune turn Continental around? Continental was in dire straits because the deregulation of the commercial airline industry in 1978 ushered in a... View Details

Keywords: Transformation; Insolvency and Bankruptcy; Profit; Leading Change; Organizational Change and Adaptation; Performance Improvement; Labor and Management Relations

November 2015 (Revised March 2018)
Case

Air Products' Pursuit of Airgas (A)

By: Charles C.Y. Wang, Paul M. Healy, Penelope Rossano and Kyle Thomas

This case centers around the Air Products' hostile takeover attempt of Airgas in 2010. Air Products argued that its offer of a 38% premium is generous given Airgas' poor performance, which Air Products attributed to underperforming and entrenched managers at Airgas. On... View Details

Keywords: Acquisition; Business and Shareholder Relations; Industrial Products Industry; Energy Industry; Chemical Industry

April–May 2021
Article

Labor Mobility and Antitakeover Provisions

By: Aiyesha Dey and Joshua White

How do firms protect their human capital? We test whether firms facing an increased threat of being acquired strengthen their antitakeover provisions (ATPs) in order to bond with their employees. We use the adoption of the Inevitable Disclosure Doctrine (IDD) by U.S.... View Details

Keywords: Labor Mobility; Antitakeover Provisions; Trade Secrets; Implicit Contracting; Employee Bonding; Corporate Governance; Acquisition; Human Capital; Strategy; Innovation and Invention; Intellectual Property; Safety

December 1997
Case

American Cyanamid (A) & (B) (Combined)

American Home Products' (AHP) $9 billion hostile takeover of American Cyanamid (Cyanamid) was the largest merger-and-acquistion transaction in 1994, and made AHP the fourth largest pharmaceutical firm in the United States. At the time of AHP's offer, Cyanamid had... View Details

Keywords: Governing and Advisory Boards; Mergers and Acquisitions; Corporate Governance; Conflict and Resolution; Pharmaceutical Industry

May 2010
Article

Is Delaware's Antitakeover Statute Unconstitutional? Evidence from 1988-2008

By: Guhan Subramanian, Steven Herscovici and Brian Barbetta

Delaware's antitakeover statute, codified at Section 203 of the Delaware corporate code, is by far the most important antitakeover statute in the United States. When it was first enacted in 1988, three bidders challenged its constitutionality under the Commerce Clause... View Details

Keywords: Courts and Trials; Opportunities; Bids and Bidding; Laws and Statutes; Decisions; Change; Acquisition; United States

16 Mar 2010
First Look

First Look: March 16

anti-trust immunity. Capitalism is not a natural system and it did not emerge or spread by an unguided process like biological evolution; it has only existed since the liberation of the markets for land, labor, and capital, i.e., the end of feudalism. Its spread is a... View Details

Keywords: Martha Lagace

April 1998 (Revised May 2001)
Supplement

Acquisition of Consolidated Rail Corporation (B), The

By: Benjamin C. Esty, Lori A. Flees and Mathew M Millett

Eight days after CSX announced it was going to buy Consolidated Rail (Conrail) for $88.65 per share, Norfolk Southern made a hostile $100 per share bid for Conrail. Over the next several months, the potential acquirers upped their bids while exchanging criticism in the... View Details

Keywords: Law; Valuation; Rail Transportation; Bids and Bidding; Governance Controls; Mergers and Acquisitions; Business Strategy; Corporate Finance; Rail Industry; United States

2011
Book

Capitalism: Its Origins and Evolution as a System of Governance

By: Bruce R. Scott

Capitalism, as defined in this book, is an indirect, three-level system of governance for economic relationships (i.e., economic, administrative, and political). Whereas economic markets can coordinate supply and demand within an existing system thanks to the invisible... View Details

Keywords: Economic Systems; Price; Governance; Government and Politics; Books; Markets; Relationships; System