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Finance: What is a Pac Man Defense? 21 Views


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Description:

A Pac-Man defense is a strategy for defending against a hostile takeover. Or...against unwelcome houseghosts.

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Transcript

00:00

Finance a la shmoop what is a pacman defense?

00:05

[Pacman eating] yeah well wacka wacka to you too...Hostile takeovers are rare in real life not so

00:12

rare in pac-man but when they do happen there exists a whole cadre of strategies

00:17

behind defending them at least from the company's perspective being taken over

00:21

there and pac-man defense is inarguably the best named strategy of all of

00:27

them in essence what happens when we'll say an angry competitor let's call him

00:32

blinky Inc tries to buy an angrier competitor let's call them inky inc.

00:38

well blinky would be buying shares of inky in the open marketplace filing to [Blinky and inky appear]

00:44

go past 15% ownership and eventually own enough shares to elect its own Board of

00:49

Directors and make a takeover happen well in a Pac Man defense as blinky is

00:54

snarfing up shares of inky, inky buys shares of blinky sort of turning the

01:00

tables you know like this and while you're gobbling up that competition and [Pacman gobbling competition]

01:04

don't forget to eat a bunch of cherries or a strawberry every once in a while

01:07

because you know you still need your fruits and veggies

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