What is the Jonestown Defense?
A Jonestown defense is a tactic to prevent hostile takeovers. It often results in the death of the target.
How Does the Jonestown Defense Work?
Let's say Company ABC makes a bid to buy Company XYZ. Company XYZ's founder, who is the chairman of the board, absolutely abhors Company ABC and refuses to sell the company to them. Company ABC goes directly to the Company XYZ shareholders and offers to buy theirfor a 10% premium.
Fearful that Company ABC may be successful in its efforts, Company XYZ intentionally hurts the value of the company by selling its key intellectual property to the founder, ceasing advertising, breaking its supplier agreements in order to slow down production, and laying off 2,000 workers. With key aspects of the company gutted, Company ABC drops its bid for Company XYZ, which is now a hollow, valueless shell of its former self.
Why Does the Jonestown Defense Matter?
The Jonestown defense is a reference to the Jonestown massacre, which took place in Guyana on November 18, 1978. Cult leader Jim Jones convinced 912 people to commit suicide after telling them the United States government was going to invade their kill them anyway.and
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
Most people would be thrilled to collect a healthy 18% dividend every year. Use your nest-egg to buy $500,000 worth...Read More →
The old adage “You get what you pay for” is one we've heard all our lives, probably since we were first introduced to money....Read More →
le most securities pay their dividends quarterly (every three months), you might see others paying monthly. Although quarterly payments are far more typical, more frequent monthly dividends may...Read More →
Growth, for its own sake, has tripped up many companies -- and investors, for that matter. Every year around this time, financial publications publish their list of...Read More →