What it is:
A kamikaze defense is a method for deterring a potential acquirer from purchasing a company.
How it works (Example):
The kamikaze defense is named after the suicide tactics of Japanese pilots during World War II. Let's say Company ABC makes a bid to buy Company XYZ. The XYZ board does not want to sell the company, but Company ABC goes directly to the Company XYZ shareholders and offers to buy their shares for a 10% premium.
Fearful that Company ABC may be successful in its efforts, Company XYZ sells its key intellectual property and randomly buys Company 123, which makes cigarettes and horsemeat. Company ABC finds Company XYZ less attractive and drops its bid.