Pac-Man defense

From Wikipedia, the free encyclopedia

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), after eating an "Energizer", also known as a "Power Pill" which allows him to do this, turns around and devours the ghost which was previously pursuing him. The term (though not the technique) was coined by buyout guru Bruce Wasserstein.