Fair Price Provision (M&A Glossary)

Summary

A provision of a target’s constituent documents designed to protect against the acquisition of the remaining shares of a target corporation by an interested shareholder for a price lower than the price such interested shareholder previously paid to acquire its existing shares. Typically, a fair price provision will require a supermajority of all shareholders or a supermajority of all disinterested shareholders to approve the interested shareholder’s acquisition of the corporation and thereby incentivize the acquirer to negotiate with the board of directors.