A Hostile Merger occurs when one company attempts to merge with another without the approval or consent of the target companyís management or board of directors. Unlike friendly mergers, which are mutually agreed upon, a hostile merger is characterized by aggressive acquisition tactics aimed at gaining control despite opposition from the target companyís leadership.

In a hostile merger, the acquiring company usually bypasses the board and directly approaches shareholders with a tender offeróa public proposal to purchase shares at a premium price. Another common strategy is a proxy fight, where the acquirer tries to replace the target companyís board members with individuals who will approve the merger. These approaches allow the acquirer to take control of the company even when management is resistant.

The motivation behind a hostile merger often includes gaining access to valuable assets, expanding market share, achieving operational synergies, or eliminating competition. However, such mergers can lead to significant conflicts between the two companies, resulting in high legal, financial, and reputational costs.

Target companies usually adopt defensive strategies to resist hostile takeovers or mergers. Common defenses include the poison pill strategy (making shares less attractive to the acquirer), the white knight strategy (finding a friendly acquirer), or share buybacks to consolidate ownership.

From a regulatory perspective, hostile mergers are closely scrutinized to ensure they comply with competition laws and protect shareholder interests. In India, such activities fall under the oversight of the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI).

In essence, a hostile merger reflects an aggressive corporate strategy where one company seeks control over another despite resistance. While it can create value for the acquiring firm, it often involves complex challenges and heightened risks for both parties involved.