Definition

Noun: A defensive corporate takeover strategy in which a company that is the target of a potential acquisition threatens to reverse the situation by attempting to acquire the company that is trying to acquire it. This strategy is named after the classic video game character Pac-Man, who consumes enemies to survive.

Usage

The term is used in the context of corporate finance, mergers and acquisitions (M&A), and business strategy. It describes a specific, aggressive defensive tactic.

Examples

• The board adopted a Pac-Man strategy, announcing a tender offer for the hostile bidder's shares.
• To fend off the unwelcome takeover attempt, the company's only viable option was to employ a Pac-Man strategy.
• The effectiveness of a Pac-Man strategy depends heavily on the relative financial strengths of the two companies.

Advanced Usage

• The strategy is considered a form of a "reverse takeover" defense. It is a high-risk tactic, as it can lead to a costly bidding war or significant debt for the defending company.
• It is often a strategy of last resort when other defenses (like a "poison pill") are not available or have failed.

Variants and Related Words

• Pac-Man Defense: A synonymous term for the same strategy.
• Takeover Defense: The general category of strategies to prevent an unwanted acquisition.
• Reverse Takeover: A broader term for any situation where a smaller company acquires a larger one, which can be the result of a Pac-Man strategy.

Synonyms

• Counter-takeover bid
• Reverse takeover bid

Related Phrases

• "To launch a Pac-Man defense": To execute this specific strategy.
  • Faced with a hostile bid, the company was forced to launch a Pac-Man defense.

Noun

1. the target company defends itself by threatening to take over its acquirer