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 ?
On 4 August 2015, ASIC released Consultation Paper 234 Remaking ASIC class orders on takeovers and schemes of arrangement (CP 234), which outlined our proposals to remake Class Order CO 05/850 Unsolicited offers under a regulated foreign takeover bid, Class Order CO 02/259 Downstream acquisitions: foreign stock markets, Class Order CO 00/2338 Relief from the minimum bid price principles621(3), Class Order CO 02/249 Approved overseas financial marketss257B(7), Class Order CO 04/523 Investor directed portfolio services takeover relief and Class Order CO 09/459 Takeovers relief for accelerated rights issues with minor changes, including:
14) In other words, the economic advantages of takeover bids to shareholders of the target, and to the economy generally, must be weighed against the alleged negative effects of foreign takeovers.
As previously announced, Swisscom intends to sell PubliGroupe s minority shareholdings in the media companies SNP Societe Neuchateloise de Presse SA (29%), SE-dostschweiz Presse und Print AG (20%) and Rhone Media Press (18%) if its takeover bid is successful.
The three are forming capital and business alliances and believe a hostile takeover bid against one of them could affect the others, the companies said.
Lenovo's acquisition of IBM's PC business and TCL-Thomson Electronics' strategic alliance in 2004, as well as Haier's aborted takeover bid of Maytag in 2005, illustrate a trend shift in Chinese corporates' globalization strategy.
The Rights Plan addresses the Company's concerns that existing legislation does not allow sufficient time, if a takeover bid is made, for either the Board of Directors or the shareholders to properly consider a takeover bid, or for the Board of Directors to seek alternatives to such a bid and also addresses the Company's concern that all shareholders be treated equally in any transaction involving a change in control of the Company.
s plan to turn itself into an unlisted company through a management buyout is expected to be successful, a Pokka official said Tuesday, the day a takeover bid for its purchase was completed.
The plan is intended to protect the company and its stockholders from potentially coercive takeover practices or takeover bids that are inconsistent with the interests of the company and its stockholders.
The agency's position was a fresh view on the matter as the Securities and Exchange Law does not refer to a stock split as a condition that allows bidders to withdraw their announced takeover bids.
The Council of Ministers conformed without a debate on 19 March that it cannot approve the amendments made by the European Parliament to its common position on the proposed Directive on company law concerning takeover bids.
The Rights Plan is not intended to block takeover bids.
Two Japanese companies announced Thursday measures to fight hostile takeover bids by U.