takeover bid

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Takeover Bid

An offer in which an investor or company attempts to buy a publicly-traded company, or, more commonly, most of the shares in that company. For example, if Corporation A offers to buy 51% or more of Corporation B, then Corporation A is making a takeover bid. Takeover bids are made for cash, stock, or both. Likewise, they may be friendly or hostile; a friendly takeover bid occurs when the board of directors supports the acquisition and a hostile takeover bid occurs when it does not. See also: Antitakeover measure, Greenmail.

takeover bid

an attempt by one or a number of companies to achieve the TAKEOVER of another company by bidding for (see BID) all or the majority of voting SHARES in the target company A number of terms are used to describe the various tactics available to the bidding and defending firms, including:
  1. black knight; a firm that launches an unwelcome (contested) takeover bid for some other firm;
  2. concert party; a number of investors who each buy shares in a company with a view to pooling their shareholdings and acting in concert to take over the company;
  3. dawn raid; an attempt to buy up as many shares in a company as possible on the STOCK MARKET over a short period of time, as a prelude to making a full takeover bid for the company;
  4. golden parachute; any generous severance terms written into the employment contracts of the directors of a firm that makes it expensive to sack the directors if the firm is taken over;
  5. greenmail; a situation in which a firm's shares are being bought up by a (potential) takeover bidder, who is then headed off from making an actual bid, by that firm's directors buying these shares from him at a premium price;
  6. leveraged bid; a takeover that is financed primarily by the issue of LOAN CAPITAL rather than share capital, which increases the CAPITAL GEARING of the enlarged firm. (see JUNK BOND);
  7. pac-man defence; a situation in which the firm being bid for itself now makes a bid for the acquiring firm (see REVERSE TAKEOVER);
  8. poison pill; a tactic employed in a takeover bid whereby the intended victim itself takes over or merges with some other firm, in order to make itself financially or structurally less attractive to the potential acquirer;
  9. porcupine; any complex agreements between a firm and its suppliers, customers or creditors that make it difficult for an acquiring company to integrate this firm with its own business;
  10. reverse takeover; an attempt by a smaller firm to take over a larger firm. Since the smaller aggressor company has a smaller capital than the victim, it must usually issue additional shares or raise loans to finance the takeover (see pac-man defence);
  11. shark repellent; any measures specifically designed to discourage takeover bidders; for example, altering the company's ARTICLES OF ASSOCIATION to increase the proportion of shareholders' votes needed to approve the bid above the usual 50% mark;
  12. white knight; the intervention in a takeover bid of a third firm which itself takes over or merges with the intended victim firm to rescue it from its unwelcome suitor. See also ARBITRAGEUR, MERCHANT BANK.

takeover bid

an attempt by one FIRM to TAKE OVER another by acquiring the majority of shares in a public JOINT-STOCK COMPANY. The financial terms of the bid may involve a straight cash offer or a mix of cash and shares in the bidder. The price being offered per share in the target company will generally exceed the value of that company's physical assets and the current stock exchange price of its shares. The price premium being offered by the takeover bidder reflects its valuation of the underlying value of that company's physical assets, brands, trade contacts, etc., and if these could be more effectively managed as part of the bidder's overall business. A number of terms are used to describe the various tactics available to the bidding and defending firms, including:
  1. black knight: a firm that launches an unwelcome (contested) takeover bid for some other firm;
  2. golden parachute: any generous severance terms written into the employment contracts of the directors of a firm that make it expensive to sack the directors if the firm is taken over;
  3. greenmail: a situation in which a firm's shares are being bought up by a (potential) takeover bidder who is then headed off from making an actual bid by that firm's directors buying these shares from him at a premium price;
  4. leveraged bid: a takeover that is financed primarily by the issue of LOAN CAPITAL (often in the form of‘junk bonds) rather than SHARE CAPITAL, which increases the CAPITAL GEARING of the enlarged firm;
  5. pac-man defence: a situation in which the firm being bid for itself now makes a bid for the acquiring firm (see REVERSE TAKEOVER);
  6. poison pill: a tactic employed in a takeover bid whereby the intended victim firm itself takes over or merges (see MERGER) with some other firm in order to make itself financially or structurally less attractive to the potential acquirer;
  7. porcupine: any complex agreements between a firm and its suppliers, customers or creditors that make it difficult for an acquiring company to integrate this firm with its own business;
  8. shark repellants: any measures specifically designed to discourage takeover bidders - for example, altering the company's articles of association to increase the proportion of shareholder votes needed to approve the bid above the usual 50% mark; (i) white knight: the intervention in a takeover bid of a third firm, which itself takes over or merges with the intended victim firm to ‘rescue’ it from its unwelcome suitor. See CITY CODE.
References in periodicals archive ?
The Offer to Purchase is for distribution only to persons outside the United Kingdom, persons within the United Kingdom falling within the definition of Investment Professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order")) or within Article 43 of the Order, or other persons to whom it may lawfully be communicated in accordance with the Order (all such persons being referred to herein as "relevant persons").
The Offer and the Offer to Purchase have not been submitted to the clearance procedure of the Commissione Nazionale per le Societa e la Borsa (CONSOB) pursuant to Italian laws and regulations.
E[acute accent]The Offer has not been notified to the Belgian Banking, Finance and Insurance Commission (Commission bancaire, financiere et des assurances) pursuant to Article 18 of the Belgian law of 22 April 2003 on the public offering of securities (the "Law on Public Offerings") nor has the Offer to Purchase been, or will it be, approved by the Belgian Banking, Finance and Insurance Commission pursuant to Article 14 of the Law on Public Offerings.
IS BEING MADE ONLY PURSUANT TO THE TENDER OFFER DOCUMENTS, INCLUDING THE OFFER TO PURCHASE, THE SUPPLEMENT TO THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL THAT OFFERORS DISTRIBUTED TO SHAREHOLDERS.
SHAREHOLDERS SHOULD READ CAREFULLY THE OFFER TO PURCHASE, THE SUPPLEMENT TO THE OFFER TO PURCHASE AND RELATED MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING VARIOUS TERMS AND CONDITIONS TO THE TENDER OFFER.
The exact terms and conditions of the tender offer and consent solicitation are specified in, and qualified in their entirety by, the Offer to Purchase.
The tender offer and consent solicitation are made solely by means of the Offer to Purchase and the related Consent and Letter of Transmittal.
The proposed amendments to the indenture will be set forth in a first supplemental indenture and are described in more detail in the Offer to Purchase.
This announcement is not an offer to purchase or the solicitation of an offer to sell shares of the fund.
Except as set forth above, all other provisions of the tender offer and consent solicitation with respect to the Notes are as set forth in the Offer to Purchase and Consent Solicitation Statement, dated November 30, 2005 (the "Offer to Purchase").