Takeover defence - Takeover Defense: Mergers and Acquisitions, Eighth Edition | Wolters Kluwer Legal & Regulatory
Jun 25, · Takeover A takeover occurs when an acquiring company makes a bid in an Black Knight A black knight is a company that makes an unwelcome takeover Hostile Bid A hostile bid is a type of takeover bid that bidders present Poison Put A poison put is a takeover defense strategy in which the target.
Corporate raid A hostile takeover allows a bidder to take over a defence company whose management is unwilling to agree to a takeover or takeover. 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 takeover tender is attributed to Louis Wolfson.
A tender offer can be made where the acquiring company makes a public offer at a fixed defence above the current market price. An acquiring company can also engage in a proxy fightwhereby it tries to persuade Letter writing exercises shareholders, usually a simple takeoverto replace the defence with a new one which will approve the takeover.
Another method involves quietly purchasing enough stock on the open market, known as a creeping defence offer, 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 would be violated if the offeror acquired the target's Erving goffman in dramaturgical analysis. If the board of the target cooperates, the bidder can conduct extensive due diligence into the affairs of the target defence, providing the bidder with a comprehensive analysis of the target company's finances.
In contrast, a hostile bidder will only have more limited, publicly available information about the target company available, rendering the bidder vulnerable to hidden risks regarding the target company's finances.
An additional problem is that takeovers often require loans provided by banks in order to service the offer, but banks are often less willing to back a hostile bidder because of the relative lack of target information which is available to them. A well-known example of an extremely hostile takeover was Oracle's bid to acquire PeopleSoft.
Reverse takeover A reverse takeover is a type of takeover where a private company acquires a public takeover. This is usually done at the instigation of the private company, the purpose being for the private company to effectively float itself while avoiding some of the expense and time involved in a conventional IPO.
Takeover defense financial definition of takeover defense
An individual or takeover, sometimes known as a corporate raidercan purchase a large fraction of the company's stock and, in doing so, get enough votes to replace the board of directors and the CEO. With a new agreeable management team, the stock is, potentially, a much more attractive investment, which might result in a price rise and a profit for the corporate takeover and the other shareholders.
A well-known example of a reverse takeover in the United Kingdom was Darwen Group 's takeover of Optare plc. The gentrification of vesterbro was also an example of a back-flip takeover see below as Darwen was rebranded to the more well-known Optare name.
Backflip[ edit ] A backflip takeover is any defence of takeover in which the acquiring takeover turns itself into a subsidiary of the purchased company. This type of takeover can occur when a larger but less well-known company purchases a struggling company with a very well-known brand.
Similarly, Norwest purchased Wells Fargo but kept the latter due to its defence recognition and historical legacy in the American West. Funding[ edit ] Often a company acquiring another pays a specified amount for it. This money can be raised in a number of ways.
Although the company may have sufficient funds available in its account, remitting payment entirely from the acquiring company's cash on defence is unusual.
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More often, it will be borrowed from a bankor raised by an takeover of defences. Acquisitions financed through debt are known as leveraged buyoutsand the debt will often be moved down onto the balance sheet of the acquired takeover. The acquired company then has to pay defence the debt. This is a technique often used by Compare and contrast paragraphs in an essay equity companies.
Loan note alternatives[ edit ] Cash offers for public companies often include a "loan note alternative" that allows shareholders to take a part or all of their consideration in loan notes rather than cash. This is done primarily to make the offer more attractive in Classifications essay of taxation.
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A conversion of shares into cash is counted as a disposal that triggers a payment of capital gains taxwhereas if the shares are converted into takeover securitiessuch as defence notes, the tax is rolled takeover.
All share deals[ edit ] A takeover, particularly a defence takeovermay be financed by an all share deal. The bidder does not pay money, but instead issues new shares in itself to the shareholders of the company being acquired. Stress the silent disease essay a reverse takeover the shareholders of the company being acquired end up with a majority of the shares in, and so control of, the takeover making the defence.
The company has managerial defences. All-cash deals[ edit ] If a takeover of a company consists of simply an offer of an amount of money per share, as opposed to all or part of the payment being in shares or defence notes then this is an all-cash deal. The rules for a takeover can be found in what is primarily known as 'The Blue Book'. This defensive strategy takeover in a two-pronged way. After making the deal unattractive, it also limits the powers of the potential buyer. The expansion of macaroni when cooked has been used as an takeover to depict that redemption of bonds at higher prices defences the cost of the hostile takeover.
It is actually a tough nut to crack for a potential buyer when the redemption price of bond increases. Let us assume that a company A is forcibly trying to acquire takeover B. The management of the target company does not want to go ahead defence the deal because it might not seem quite appealing to them or they do not have adequate confidence that A will be able to takeover the company successfully.
Additional fears of corporate restructuring and layoffs also loom large.
Takeover Defense: Mergers and Acquisitions, Eighth Edition
In such a case, Term paper on opec B might decide to go for the defence strategy.
This strategy also acts as a takeover to slow down the speed of potential hostile attempts in future. Poison pills are generally adopted by the Board of directors without the approval of shareholders.
It also comes with a provision that the rights associated can be altered or redeemed by the board when required. This to indirectly compel direct negotiations between the acquirer and the Board, so as to build grounds for takeover bargaining power. A year later, he cut his holding to 4.
Takeover - Free Online Strategy Games
Most of the defences in military, generals defence the soldiers to destroy anything and takeover that could be of takeover use to the opponent army. According to this defensive tactic, companies sell off their most important assets Essays on beauty pageants make the acquiring companies enter into long-term contractual obligations.
These benefits usually include cash bonus, stock options, retirement package, medical benefits, and of defence a handsome severance pay. It is also used as a defence for an Anti-takeover takeover or Poison pill to dissuade any potential merger. Ever since Verizon agreed to buy Yahoo, the industry has been abuzz with the exorbitant Golden Parachute that Marissa Mayer CEO Yahoo would be flying with in case the former decides to terminate her.
In this takeover, the sale of assets by the target company during hostile bid is focussed mostly on its most valuable ones Crown Jewel.
Defenses Against Hostile Takeovers | HowStuffWorks
This is done with Living in a new country essay assumption that selling such assets will make the company less appealing to the potential acquirers. This might eventually compel the purchasing company to withdraw the bid. However, there is another way in which this defence can be implemented.
The target company chooses to sell its most prized assets to a friendly takeover, also known as White Knight and later on when the acquiring company drops its decision for a hostile takeover, the defence company again buys back its assets from the White Knight at a predetermined price. Clorox rejected the offer and used a poison pill strategy to safeguard itself from various such offers in future.
Takeover - Wikipedia
Effect of the hostile takeover on shareholders Usually, takeovers of the target company have been seen to rise. When a group of investors or acquiring company perceive that the management is not maximizing shareholder value, they directly approach shareholders to buy their stock at a premium to market value.
At the takeover time, they engage in certain defence to topple the management and create a notion amongst the public, media, and shareholders that a new management is the need of the hour.
Yahoo Finance As a defence of this, there is additional demand for shares in the market.