Target Boards will Consider More Aggressive Defensive Tactics When Facing a Hostile Bid

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Two well-known Canadian companies dominated the M&A headlines last summer and fall, one as the hunter and one as the hunted. Although the outcomes in both situations were similar – hostile bidders turned away – the cases highlight an important question: whether directors of Canadian companies facing a hostile bid find themselves with a relatively empty toolbox compared with directors in other jurisdictions.

As the battle for Potash Corporation of Saskatchewan was waged, only three possible outcomes appeared evident:

1. BHP Billiton would be successful in its bid;
2. Potash Corporation would find some alternative transaction led by a "white knight"; or