Pac-Man defense

The Pac-Man defense is a defensive option to stave off a hostile takeover. It is when a company that is under a hostile takeover acquires its would-be buyer.

The most quoted example in U.S. corporate history is the attempted hostile takeover of Martin Marietta by Bendix Corporation in 1982. In response, Martin Marietta started buying Bendix stock with the aim of assuming control over the company. Bendix persuaded Allied Corporation to act as a "white knight," and the company was sold to Allied the same year. The incident was labeled a "Pac-Man defense" in retrospect.

The name refers to when Pac-Man, the star of the videogame of the same name, turns around and devours the ghost that was previously pursuing him (after eating a Power Pill that allows him to do so). The term (though not the technique) was coined by buyout guru Bruce Wasserstein.

Bibliography

• Big Deal: The Battle for the Control of America's Leading Corporations, Bruce Wasserstein, (1988, ISBN 0-446-67521-0)

External links

• Preventive anti-takeover defenses: evidence from the French market for corporate control

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