'Reverse' Strong Bear Hug – Defence tactic to influence market and share price

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    Ian Smith

    Hello All,
    One defence tactic I noticed when looking at the Cadbury defence that I thought was very important for them to justify there rejection and also influence the market and maintain a strong share price – I call it the Reverse Strong Bear Hug.
    Cadbury through rigorous performance in their business was able to strengthen is strongest defensive barrier – the share price.
    After launching its formal defence, and rejecting the offer of 717p from Kraft, Cadbury performed what I called – a ‘reverse’ Strong Bear Hug. Where Kraft created a Bear Hug, Saturday Night Special which then went public creating a ‘Strong’ Bear Hug; Cadbury continuously upgraded and updated publicly available information about performance and proved how this was achievable. Then published improvements made to the upgraded targets in January 2010 – this strengthened Cadbury’s position in the negotiations and resulted in the offer of 850p.

    This is dubbed a reverse strong bear hug as, oppose to attacking a company by publicising an attractive offer, Cadbury defended themselves by publicising their proof and justification for rejecting that offer, as well as strong performance figures to influence market analysts and share price – this allowed them to reason with their own shareholders as well as negotiate more strongly with their attacker Kraft.

    Thoughts / questions welcome.

    Best regards,
    Ian Smith

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