Bear Hug

A bear hug is a takeover strategy in which an acquiring company makes a very generous, often unsolicited, acquisition offer — at a substantial premium to the target company's current market price — directly to the target's shareholders and board of directors, framing the offer as so attractive that the board would face significant shareholder opposition if it rejected the bid. The term reflects the idea that the offer is so compelling it becomes difficult to refuse — like being held tightly in an embrace from which escape is uncomfortable. Bear hug offers are typically made publicly, creating immediate upward pressure on the target's stock price and putting the board in a difficult position: accepting the offer may be in shareholders' short-term interests, but the board may have strategic, cultural, or personal reasons to resist. In Indian capital markets, elements of the bear hug tactic have appeared in high-profile acquisition situations — acquirers sometimes announce premium offers publicly before the target board has formally engaged in negotiations, leveraging shareholder and media pressure to force acceptance. SEBI's Takeover Code governs how such public announcements must be structured and what obligations they create for the acquirer.