Standstill agreement

A standstill agreement is a form of hostile takeover defense in which a target company acquires a promise from an unfriendly bidder to limit the amount of stock that the bidder buys or holds in the target company. By obtaining the promise from the prospective acquirer, the target company gains more time to build up other takeover defenses. In many cases, the target company promises, in exchange, to buy back at a premium the prospective acquirer's stock holdings in the target.