I've seen it done when there's an outside synergy to be gained - ie, the buyer has a complimentary holding outside and needs either controling interest, or large enough stake to exert influence on mgmt to force a business relationship. Frequently, the buyer is also holding a good sized chunk of the company's debt (Bonds/CP) as an ace in the hole for pressuring mgmt into compliance. Relationship could range from doing business to a merger for tax benefits - lots of possibilities.
Will follow-up by saying that 9 out of 10 times, this DID pan out very well for anyone holding stock at the bottom of the range. Trick always seems to be picking the exit point (pardon me being Captain Obvious for a sec <G>)