Home / Financial Glossary / Kamikaze Defense
Kamikaze-defense
Kamikaze-defense

Kamikaze Defense

Kamikaze Defense

A kamikaze defense is a method for deterring a potential acquirer from purchasing a company.

How it works:

Kamikaze defense is named after the suicide attacks of Japanese pilots during World War II. For example, Company FGH makes a bid to buy Company STW. The STW board of directors does not want to sell the company, but Company FGH goes directly to the Company STW shareholders and offers to buy their shares for a 15% premium.

Fearful that Company FGH may be successful in its efforts, Company STW sells its key intellectual property and randomly buys Company X35, which makes cigarettes and horsemeat. Company FGH finds Company STW less attractive and drops its bid.

Why it Matters:

The kamikaze defense is near suicide in that the board has to be willing to nearly kill the company in order to save it from acquisition. This is very risky, and in some cases the shareholders will oppose the effort. For this reason, the kamikaze defense is often a last resort.

How to Draw Trend Lines

Support and Resistance Lines

Forex Trend Trading

 

Check Also

Sinic

Fitch downgraded Sinic – Chinese Real Estate Developer Slumps 87%

Sinic Holdings one of the biggest Chinese real estate developers slumped 87% at 0.50 and trading halted in Hong Kong as fears of Evergrande contagion grow in the region. The stock hit the daily low at 0.37, on Friday Sinic stock closed at 3.85.