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Hub AI
Takeover AI simulator
(@Takeover_simulator)
Hub AI
Takeover AI simulator
(@Takeover_simulator)
Takeover
In business, a takeover is the purchase of one company (the target) by another (the acquirer or bidder). In the UK, the term refers to the acquisition of a public company whose shares are publicly listed, in contrast to the acquisition of a private company.
Management of the target company may or may not agree with a proposed takeover, and this has resulted in the following takeover classifications: friendly, hostile, reverse or back-flip. Financing a takeover often involves loans or bond issues which may include junk bonds as well as a simple cash offer. It can also include shares in the new company.
A friendly takeover is an acquisition which is approved by the management of the target company. Before a bidder makes an offer for another company, it usually first informs the company's board of directors.
In a private company, because the shareholders and the board are usually the same people or closely connected with one another, private acquisitions are usually friendly. If the shareholders agree to sell the company, then the board is usually of the same mind or sufficiently under the orders of the equity shareholders to cooperate with the bidder. This point is not relevant to the UK concept of takeovers, which always involve the acquisition of a public company.[citation needed]
A "bear hug" is an unsolicited takeover bid which is so generous that the shareholders of the target company are very likely to submit, accepting the offer.
A hostile takeover allows a bidder to take over a target company whose management is unwilling to agree to a merger or takeover. The party who initiates a hostile takeover bid approaches the shareholders directly, as opposed to seeking approval from officers or directors of the company. A takeover is considered hostile if the target company's board rejects the offer, and if the bidder continues to pursue it, or the bidder makes the offer directly after having announced its firm intention to make an offer. Development of the hostile takeover is attributed to Louis Wolfson. Hostile takeovers are relatively rare; by one estimate, only 40 takeovers (out of 3,300) in 1986 were hostile.
A hostile takeover can be conducted in several ways. A tender offer can be made where the acquiring company makes a public offer at a fixed price above the current market price. An acquiring company can also engage in a proxy fight, whereby it tries to persuade enough shareholders, usually a simple majority, to replace the management with a new one which will approve the takeover. Another method involves quietly purchasing enough stock on the open market, known as a creeping tender offer or dawn raid, to effect a change in management. In all of these ways, management resists the acquisition, but it is carried out anyway.
In the United States, a common defense tactic against hostile takeovers is to use section 16 of the Clayton Act to seek an injunction, arguing that section 7 of the act, which prohibits acquisitions where the effect may be substantially to lessen competition or to tend to create a monopoly, would be violated if the offeror acquired the target's stock.
Takeover
In business, a takeover is the purchase of one company (the target) by another (the acquirer or bidder). In the UK, the term refers to the acquisition of a public company whose shares are publicly listed, in contrast to the acquisition of a private company.
Management of the target company may or may not agree with a proposed takeover, and this has resulted in the following takeover classifications: friendly, hostile, reverse or back-flip. Financing a takeover often involves loans or bond issues which may include junk bonds as well as a simple cash offer. It can also include shares in the new company.
A friendly takeover is an acquisition which is approved by the management of the target company. Before a bidder makes an offer for another company, it usually first informs the company's board of directors.
In a private company, because the shareholders and the board are usually the same people or closely connected with one another, private acquisitions are usually friendly. If the shareholders agree to sell the company, then the board is usually of the same mind or sufficiently under the orders of the equity shareholders to cooperate with the bidder. This point is not relevant to the UK concept of takeovers, which always involve the acquisition of a public company.[citation needed]
A "bear hug" is an unsolicited takeover bid which is so generous that the shareholders of the target company are very likely to submit, accepting the offer.
A hostile takeover allows a bidder to take over a target company whose management is unwilling to agree to a merger or takeover. The party who initiates a hostile takeover bid approaches the shareholders directly, as opposed to seeking approval from officers or directors of the company. A takeover is considered hostile if the target company's board rejects the offer, and if the bidder continues to pursue it, or the bidder makes the offer directly after having announced its firm intention to make an offer. Development of the hostile takeover is attributed to Louis Wolfson. Hostile takeovers are relatively rare; by one estimate, only 40 takeovers (out of 3,300) in 1986 were hostile.
A hostile takeover can be conducted in several ways. A tender offer can be made where the acquiring company makes a public offer at a fixed price above the current market price. An acquiring company can also engage in a proxy fight, whereby it tries to persuade enough shareholders, usually a simple majority, to replace the management with a new one which will approve the takeover. Another method involves quietly purchasing enough stock on the open market, known as a creeping tender offer or dawn raid, to effect a change in management. In all of these ways, management resists the acquisition, but it is carried out anyway.
In the United States, a common defense tactic against hostile takeovers is to use section 16 of the Clayton Act to seek an injunction, arguing that section 7 of the act, which prohibits acquisitions where the effect may be substantially to lessen competition or to tend to create a monopoly, would be violated if the offeror acquired the target's stock.