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Cram-Down Merger
A forced merger where minority shareholders are compelled to sell their shares or convert them under new terms, often used in hostile takeovers.
Implications
A type of merger in which the acquiring company forces the minority shareholders of the target company to accept the terms of the merger, often used in situations where the acquiring company already holds a majority stake.
Example
Example: A large tech firm uses a cram-down merger to acquire the remaining shares of a smaller subsidiary, forcing minority shareholders to accept a buyout at a predetermined price.
Related Terms
Different from a friendly merger, where all parties agree to the terms, a cram-down merger imposes terms on minority shareholders, often leading to disputes.
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