What is ‘Fat Man Strategy ‘
A takeover defense tactic that involves the acquisition of a business or assets by a target company. The strategy is based on the premise that the bulked-up company – the “fat man” – would have reduced appeal to a hostile bidder, especially if the acquisition increases the acquirer’s debt load or decreases available cash.
Explaining ‘Fat Man Strategy ‘
This is a type of “kamikaze” defense tactic, which inflicts potentially irreversible damage on a company to prevent it from falling into hostile hands. However, it involves adding assets rather than divesting them as is the case with other kamikaze defense strategies. A disadvantage of this tactic is that acquisition candidates need to be identified well in advance of a hostile bid, otherwise there may be insufficient time to complete a fat man transaction.
Further Reading
- Heterogeneous agent models in economics and finance – www.sciencedirect.com [PDF]
- The'fat tax': economic incentives to reduce obesity – discovery.ucl.ac.uk [PDF]
- Fat as a Floating Signifier – www.oxfordhandbooks.com [PDF]
- A proposed fat-tail risk metric: disclosures, derivatives, and the measurement of financial risk – heinonline.org [PDF]
- Financial markets as nonlinear adaptive evolutionary systems – www.tandfonline.com [PDF]
- Obesity discourse and fat politics: research, critique and interventions – www.tandfonline.com [PDF]
