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Term of the Day - September 22nd, 2004
http://www.investopedia.com
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Term Of The Day: Dawn Raid
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When a firm or investor buys up a substantial amount of shares
in a company (making it a target firm). This is done by a
stock broker, acting on behalf of a company, first thing in
the morning when the stock markets open. Because the bidding
company (the predator) builds a substantial stake in its
target at the prevailing stock market price, the takeover
costs are likely to be significantly lower than the price
of a formal takeover bid.
Investopedia Says:
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Not terribly different from a dawn raid in war. Because this
is done early in the morning the target firm usually doesn't
get informed about this until it is too late, and the investor
has already scooped some controlling interest. You can be
sure to expect a takeover bid to take place shortly after a
successful dawn raid. Only a maximum of 15% of a firms shares
can be bought this way.
Related Links:
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Article: Beware of the Basher
http://www.investopedia.com/articles/00/110600.asp
Article: The Wacky World of Mergers & Acquisitions
http://www.investopedia.com/articles/01/050901.asp
Related Terms:
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Acquisition
http://www.investopedia.com/terms/a/acquisition.asp
Broker
http://www.investopedia.com/terms/b/broker.asp
Hostile Takeover
http://www.investopedia.com/terms/h/hostiletakeover.asp
Merger
http://www.investopedia.com/terms/m/merger.asp
Takeover
http://www.investopedia.com/terms/t/takeover.asp
Target Firm
http://www.investopedia.com/terms/t/targetfirm.asp
Have a Great Day!
The Investopedia Staff
http://www.investopedia.com
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