This exercise simulates a hostile takeover attempt. The target is an underperforming conglomerate with two principal business segments: consumer foods and specialty chemicals. The raider company has a history of hostile action, usually profiting from greenmail or the bust-up liquidation of the unfortunate target. Two other bidding parties are present: a white knight firm, which has had amicable relations with the target in the past and considers making a friendly bid for the target, and an LBO firm which has ample equity and lines of credit with which to finance a buyout. Finally, the instructor has the option to include two banks that can impose some restraint on possible deal frenzy. The exercise organizes students into teams representing the four companies, who must negotiate an outcome to the episode most advantageous to their own firms. The parties are motivated to take action, because the expiration of the Raider’s tender offer will occur soon, at which time, if there is no higher offer outstanding, the arbitrageurs will tender their shares and the Raider will seize control. All parties know that the Target Company’s board of directors is meeting in a few hours in an effort to settle on a course of action. This exercise is ideally suited to a) exercise students’ valuation and negotiation skills, b) train students in the unusual dynamics of hostile takeovers, and c) develop an understanding of some fundamental points of corporate governance, including the responsibility of a board of directors and the agency problems that can arise when managers’ jobs are threatened.