What Are Some Top Examples of Hostile Takeovers?

What Is a Hostile Takeover?

A hostile takeover happens when an acquiring company moves forward with buying another company, the target company, despite objections from the target company’s board of directors. Some of the most noteworthy examples of hostile takeovers include the InBev acquisition of Anheuser-Busch in 2008, the Kraft Heinz Company takeover of Cadbury in 2010, and the Sanofi S.A. acquisition of Genzyme Transgenics Corp. in 2011.

Companies pursuing a hostile takeover will use any number of tactics to gain ownership of the target company. These include making a tender offer directly to shareholders or engaging in a proxy fight to replace the target company’s management. To defend itself against the acquiring company, a target company can also deploy a variety of strategies.

A hostile takeover is the opposite of a friendly takeover, in which both parties to the transaction are agreeable and work cooperatively toward the acquisition.

Key Takeaways

• A hostile takeover happens when one company sets its sights on buying another company despite objections from the target company’s board of directors.
• A hostile takeover is the opposite of a friendly takeover, in which both parties to the transaction work cooperatively toward the result.
• Some notable hostile takeovers include when the Kraft Heinz Company took over Cadbury in 2010, when InBev took over Budweiser maker Anheuser-Busch in 2008, and when Sanofi S.A. took over Genzyme Transgenics Corp. in 2011.

Here are three examples of notable hostile takeovers and the strategies used by companies to achieve the takeovers.

Kraft Foods Inc. and Cadbury PLC

In September 2009, Irene Rosenfeld—CEO of the Kraft Heinz Company (KHC) at the time—publicly announced her intentions to acquire Britain’s top confectionery company, Cadbury PLC. Kraft offered $16.3 billion for the maker of Dairy Milk chocolate, a deal rejected by Sir Roger Carr, Cadbury’s chair.

Carr immediately put together a hostile takeover defense team, which labeled Kraft’s offer as unattractive, unwanted, and undervalued. The government even stepped into the fray. The United Kingdom’s business secretary, Lord Mandelson, said the government would oppose any offer that did not grant the famed British confectioner the respect it was due.

Kraft was undeterred and increased its offer in 2010 to about $19.6 billion. Eventually, Cadbury relented and, in March 2010, the two companies finalized the takeover; the final sale was $18.9 billion. However, the contentious battle inspired an overhaul in the rules governing how foreign companies can acquire U.K. companies. Of major concern was the lack of transparency in Kraft’s offer—and what its intentions were for Cadbury after purchasing the company.

Cadbury is currently owned by Mondelēz International. After the acquisition, the Kraft Heinz Company split into two companies—Mondelēz International and Kraft Foods Group. Mondelēz International focuses on global snacks and includes Cadbury and other brands.

InBev and Anheuser-Busch

In June 2008, the Euro-Brazilian beverage company InBev made an unsolicited bid for the iconic American beer brewer, Anheuser-Busch. InBev offered to buy Anheuser-Busch for $65 a share—a deal that valued its target at $46 billion.

The takeover quickly turned hostile, as both sides traded lawsuits and accusations. InBev filed to have Anheuser-Busch’s entire board of directors fired as part of a proxy battle to gain control of the company. The deal eventually took on a soap opera-like quality, pitting Busch family members against one another for control of the 170-year-old company.

Eventually, InBev upped its offer to $52 billion ($70 a share), an amount that swayed shareholders to accept the deal. After the acquisition, the combined company became Anheuser-Busch InBev (BUD). In 2016, the company flexed its acquisition muscle yet again, merging with its rival SABMiller in a deal worth $104.3 billion.

Sanofi-Aventis and Genzyme Corp.

One reason for an acquiring company to target another company in a hostile takeover is to use the acquisition to obtain valuable technology or research. This strategy can help jump-start the acquiring company’s ability to enter new markets. Such was the case in 2010, when France’s largest pharmaceutical company, Sanofi SA (SNY), decided to buy American biotechnology company Genzyme Transgenics Corp.

At the time, Genzyme had developed several drugs to treat rare genetic disorders. The biotechnology company also had several more drugs in its research and development pipeline. Sanofi SA was eager to expand its presence in what it believed was a lucrative niche and saw Genzyme as a prime takeover target.

After approaching Genzyme’s management several times with a friendly takeover proposal and being rebuffed, Sanofi decided to increase pressure by embarking on a hostile takeover. The CEO of Sanofi at the time, Chris Viehbacher, began courting Genzyme’s major shareholders directly, meeting with them privately to gather support for the acquisition.

The strategy worked. Nine months after the first proposal, Sanofi-Aventis bought Genzyme in a $20.1 billion cash offer. The company sweetened the deal by offering shareholders contingent value rights (CVRs) that could have been worth as much as $14 each—$3.8 billion total—if Genzyme’s Lemtrada drug, still in development, received U.S. Food and Drug Administration (FDA) approval and hit specified sales goals within set time frames. In 2019, Sanofi settled with CVR holders for $315 million after the company was accused of intentionally botching the FDA application and failing to support Lemtrada sales in a ploy to depress CVR payouts.

How Does a Hostile Takeover Occur?

A hostile takeover happens when an entity takes control of a company without the knowledge and against the wishes of the company’s management. The acquisition strategy requires that the entity acquire and control more than 50% of the voting shares issued by the company.

What Are Defenses Against a Hostile Takeover?

To deter unwanted takeovers, companies may have preemptive defenses or employ reactive defenses to fight back. They include:

• Crown jewel
• Differential voting rights
• Employee stock ownership program (ESOP)
• Golden parachute
• Pac-Man
• Poison pill

What Are Some Fictionalizations of Hostile Takeovers?

Hostile takeovers factor into the plots of the movies “Wall Street” (1987) and “Other People’s Money” (1991).

The Bottom Line

A hostile takeover occurs when one company intends to buy another company despite objections from the target company’s board of directors. Notable examples of hostile takeovers include when the Kraft Heinz Company took over Cadbury, when InBev took over Budweiser maker Anheuser-Busch, and when Sanofi SA took over Genzyme Transgenics Corp. A hostile takeover can be contrasted with a friendly takeover, in which both parties to the transaction are agreeable and work cooperatively toward the acquisition.