New York, NY business attorney Richard S. Green explains how a hostile takeover works. A hostile takeover occurs when one party makes an unsolicited and uninvited bid for another company, unlike situations where a company is actively seeking to sell itself and is open to potential buyers. In a hostile takeover attempt, a party initiates a bid without the target company’s consent, placing the company “in play,” which leads the target to explore alternative options.

More commonly, a company might announce a friendly, negotiated transaction, only for a third party to intervene with an uninvited bid for the target. A recent example of this was when Frontier proposed acquiring Spirit Airlines, but JetBlue made a hostile counteroffer against Frontier. This ultimately caused the termination of the deal, and JetBlue is now attempting to acquire Spirit.