Davis Polk Discusses Whether Companies Should Play Strong Defense in Hostile Times

Extreme dislocation and a major sell-off in global equity markets have led to many public companies finding their stock prices at severely depressed levels, often over 50% off last twelve month highs.

While most companies and investors are in crisis management mode, these markets may nevertheless present attractive opportunities for strategic or financial bidders. Moreover, we expect that campaigns from well-known activists will continue at a reasonable pace in the current market.

Many companies prepare for the possibility of a hostile campaign by having a shareholder rights plan (often called a “poison pill”) “on the shelf” and ready for adoption … Read more