Hostile Takeovers in the Financial Sector: Strategies and Defense Measures

Hostile takeovers are one of the most dramatic phenomena in modern finance. They occur when a company attempts to acquire a competitor against the wishes of management. Unlike cooperative takeovers, where all parties work together, a hostile takeover often develops into a fierce battle for control of a company. The case of Italian UniCredit and German Commerzbank vividly demonstrates how such takeover attempts unfold in practice—with resistance, strategies, and open clashes between the involved parties.

Why do hostile takeovers happen: The motivations behind them

The reasons for a hostile takeover are varied but follow a clear economic logic. The buyer typically has several goals in mind: eliminate a troublesome competitor, increase their market share, realize synergies, or profit from an undervalued company.

Once the potential acquirer is convinced that cost savings are possible and that operational performance can be significantly improved through restructuring, the risk of a hostile takeover is taken. The buyer initially contacts the target company’s board—if this is rejected, an aggressive approach inevitably follows.

Three main methods of a hostile takeover

A hostile takeover can be carried out in different ways. The most common methods differ fundamentally in their tactics and transparency toward the public and existing management.

The Tender Offer

The most classic and transparent form is the tender offer. The aggressor offers shareholders to sell their shares at a price above the market value. This bypasses the board entirely and directly targets the owners. If the acquirer manages to obtain a majority of shares, the takeover proceeds.

Creeping Takeover

This method works with patience and discretion. The acquirer gradually buys shares in small tranches on the open market—initially inconspicuously to avoid attracting attention. Once a significant stake is accumulated, the buyer publicly reveals their takeover plans to management.

Proxy Fight

In this variant, the attacker bypasses both the board and traditional share purchases. Instead, they negotiate directly with the supervisory board and influential shareholder groups. The goal: persuade them to vote out the current management at the next general meeting and install new managers who are favorable to the takeover.

Defense strategies: How companies fight back

Targeted companies have developed several proven tactics to defend themselves. The management has an arsenal of countermeasures to deter the attacker or make the takeover unprofitable.

The so-called poison pills are among the most effective strategies. The company issues new shares or takes other measures that make the acquisition significantly more expensive or complicated for the buyer. Another option is to sell off the most valuable assets—while this diminishes the company’s prestige, it makes it less attractive to the attacker.

At the same time, companies under pressure seek a so-called white knight—another buyer acceptable to management who acts as an alternative to the aggressor. This creates a competition between bidders and can drive up prices or cause the unwanted attacker to withdraw.

Another important tool is convincing shareholders. Management contacts major shareholders and tries to mobilize them against the takeover. Public rejection with well-founded arguments against the deal is also a standard measure—media campaigns can be decisive.

Practical example: The Commerzbank-UniCredit confrontation

A recent example of these dynamics occurred in 2024 during the takeover attempt of Commerzbank by Italian UniCredit. The case illustrates how modern hostile takeovers unfold and what forces come into play.

UniCredit announced its intention to acquire the German bank—without prior consultation with Commerzbank’s management. This triggered a classic takeover battle. Commerzbank relied on its traditional defense mechanisms and mobilized political and societal supporters. Given the broad distribution of Commerzbank shares among many institutions and investors, the Italian banking giant had certain advantages—it literally held the longer lever.

This case shows: hostile takeovers are highly complex financial battles where not only money but also strategy, public opinion, and political influence matter. The outcome of such takeover attempts depends on many factors—from shareholder structure and market conditions to political and regulatory environments.