“The big hostile takeover is coming back, but it is warmer and fuzzier this time. They even call it the bear hug,” writes Andrew Sorkin in today’s New York Times.

“So far this year, unsolicited offers account for 19.5 percent of the value of all deals, compared with only 2.9 percent during the corresponding period a year ago, according to Thomson Financial Securities Data.”

“In past years, many of these offers came in the form of tender offers, in which the bidder went straight to the shareholders of a company. But recently, many of the most publicized bids have been made not to shareholders but to the companies’ managements, in some cases because they could not go directly to shareholders. But unlike quiet, behind-the-scenes takeover talks, these “bear hugs” are made in a very public way.”

“EchoStar Communications’ unsolicited $30 billion offer this week for Hughes Electronics, is one example. Comcast ‘s takeover bid for AT&T’s cable-television business is another. A third is the toolmaker Danaher Corporation’s unsolicited $5.5 billion bid for a rival, Cooper Industries, which rejected it yesterday.”

“In each of these cases, the bidders knew they stood little chance of winning. They also knew that even if they lost, in many ways they would still win.”

“Take EchoStar’s bid. The chairman, Charles Ergen, took his proposal public partly to get the attention of the board of General Motors, parent of Hughes. He had held discussions with executives at Hughes, but said he was worried that G.M.’s board had not reviewed the proposal.”

“Yesterday, Mr. Ergen said he was ‘encouraged that G.M. is taking our proposal very seriously,’ after a decision by G.M.’s board on Tuesday to review the offer.”

“The publicity of a bear hug is also meant to stir shareholders to apply pressure to the company’s board. Since EchoStar made its bear hug, four lawsuits have been filed against G.M. by shareholders effectively pushing the company to consider EchoStar’s offer.”