Lock-up (finance)
From Wikipedia, the free encyclopedia
- This article is about the corporate finance term. For other meanings of lock up, see Lock Up.
Lock-up provisions act as a barrier to hostile takeover bids.
These provisions may take the form of
- (i) break-up/termination fees,
- (ii) options given to target shareholders to buy target stock,
- (iii) rights given to target shareholders to purchase target assets,
- (iv) force the vote provisions in merger agreements, and
- (v) agreements with major shareholders (voting agreements, agreements to sell shares or agreements to tender).
Lock-ups can be “soft” (shareholder permitted to terminate if superior offer comes along) or “hard” (unconditional).
