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Lip-lock offer

A Lip-Lock offer is a tactic used by corporate raiders and corporations to help facilitate a unsolicited takeover bid.

Expanded Definition

A lip-lock offer or bear hug occurs when a corporate raider takes his/her takeover bid public and threatens to bypass management to go directly to the shareholders. The raider may use a lip-lock offer when he/she perceives the company's management to be vulnerable as determined by weak/falling share price and/or the presence of shareholders looking for a quick cash out.

This tactic can be effective in that it informs dissident shareholders of an alternative solution to current management, thus potentially creating additional pressure to accept and advocates for the raider's bid. Furthermore this tactic may scare off white knight private equity firms, reducing the alternatives for current management.

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