Financial Glossary: Bear Hug


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Bear Hug

Bear Hug

An Offer made by one company to buy the shares of another for a much higher per-share price than what that company is worth.

A bear hug Offer is usually made when there is doubt that the target company's management Will be willing to sell. By offering a price far in excess of the target company's current value, the offering party can usually obtain an agreement. The target company's management is essentially forced to accept such a generous Offer because it is legally obligated to look out for the best interests of its shareholders.

The name "bear hug" reflects the persuasiveness of the offering company's overly generous Offer to the target company. By offering such a large Premium, the acquiring company essentially uses its clout to Squeeze an agreement out of the target company's management.

Posted by Ascent Limited

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