With conditions continuing to be favorable for hostile M&A including significant company cash reserves, availability of financing, attractive target valuations and the decline in takeover defenses, the spotlight is on some of the characteristics of recent hostile deals.  Raider Tactics
Hostile takeover tactics typically take the form of an offer directly to shareholders via a tender or exchange offer or an attempt to replace the target company's board via a proxy fight. In some cases, both of these tactics are used. Over the last five years, hostile acquirers have increasingly been using proxy fights for board seats to further their cause. The number of proxy fights for board seats in support of a hostile acquisition attempt more than doubled from 4 in 2007 to 9 last year. In fact, 2011 was the only year during the period where more hostile deals included a proxy fight than a tender offer. However, despite the increased announcements, most of these proxy fights did not go to a stockholder vote. Excluding three ongoing proxy fights, only 10 of the 29 announced proxy fights since 2007 went to an actual vote, with the company and the acquirer each winning five of the contests. Four of the five acquiring company proxy victories were for minority representation on the board (the one exception being Steel Partners LLC's win of five of seven seats on Point Blank Solutions, Inc.'s board at its 2008 annual meeting).
Takeover Defenses of Targeted Companies
Poison pills and classified boards are widely regarded as the two most potent takeover defenses a company can have in its arsenal. Companies with annually elected directors were targeted more frequently over the five year period than those with a classified board when comparing to the overall S&P 1500. 61% of the companies targeted had annually elected directors versus the average occurrence of non-classified boards among S&P 1500 companies over the period of 55%. Interestingly, only 58% of the targeted companies where a proxy fight was announced had annually elected directors. It would be expected that hostile acquirers utilize proxy fights more frequently against companies without a classified board because they could presumably take control of the board at one shareholder meeting. Also counterintuitively, companies with poison pills were more frequently targeted. Approximately 28% of the companies had a poison pill in place prior to the announcement of the acquisition offer. The percentage of S&P 1500 companies with a poison pill in force averaged at about 25% over the period. Perhaps these companies, and for good reason, perceived the threat of a hostile offer was more likely, whether it be their belief the company's shares were undervalued or other specific circumstances.  Poison Pill Adoptions in Response
Adopting a poison pill in response to a hostile offer is increasingly becoming part of the standard takeover defense playbook. Since 2007, 45% of the companies that did not have a poison pill in place prior to the announcement of the acquisition offer adopted one in response. However, this adoption rate has risen in all but one year since 2007. In 2011, 69% of the companies without a poison pill in place adopted one in response and the trend has continued into the early part of 2012. Since 1/1/2011, 11 of the 15 companies faced with a hostile acquisition offer that did not have a poison pill in place adopted one in response including Illumina, Inc. and Georgia Gulf Corporation in recent weeks.
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