A lobster trap, in
corporate finance, is an anti-
takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...
strategy used by target firms. In a lobster trap, the target firm issues a
charter that prevents individuals with more than 10% ownership of
convertible securities (includes convertible bonds, convertible preferred stock, and warrants) from transferring these securities to
voting stock. The term derives from the fact that
lobster trap
A lobster trap or lobster pot is a portable trap that traps lobsters or crayfish and is used in lobster fishing. In Scotland (chiefly in the north), the word creel is used to refer to a device used to catch lobsters and other crustaceans. A lo ...
s are designed to catch large
lobsters but allow small lobsters to escape.
Law of Business Formation
: Stephen J. Spielman, International University of Sarajevo
The International University of Sarajevo (IUS) is a private university located in the capital city Sarajevo, Bosnia and Herzegovina. The university was established by the Foundation for the Development of Education in 2004–2005. IUS is open to ...
.
See also
*Mergers and acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
*Takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...
*Industrial organization
In economics, industrial organization is a field that builds on the theory of the firm by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization adds real-world complications to the perf ...
* Shareholder rights plan
References
Mergers and acquisitions
Corporate finance
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