Stalking-Horse Bid

A stalking-horse bid is a bid made by an investor or group of investors to acquire a company in an attempt to drive up the price and make the acquisition more attractive to other potential buyers. The stalking-horse bidder typically makes a bid that is below the target company's current stock price, but it is still high enough to be considered a serious offer. The stalking-horse bid is then used as a starting point for negotiations with other potential buyers.

The stalking-horse bid process can be beneficial for both the target company and the stalking-horse bidder. The target company can get a higher price for its shares than it would if it were simply put up for auction. The stalking-horse bidder can also benefit by getting a discount on the target company's shares, as it is not the only bidder in the process.

However, the stalking-horse bid process can also be risky for both the target company and the stalking-horse bidder. The target company may not get the price it wants for its shares, and the stalking-horse bidder may not be able to complete the acquisition.

Before entering into a stalking-horse bid, it is important for both the target company and the stalking-horse bidder to carefully consider the risks and benefits involved.