reverse takeover

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Reverse takeover

1) A smaller company taking over a larger company.
2) Merger of the acquiring company into the target company (often to gain a public listing).
Also see Acquisiton, Reverse shell merger.

Reverse Acquisition

An act where a private company purchases a publicly traded company and shifts its management into the latter. It also normally involves renaming the publicly traded company. This allows private companies to become publicly traded while avoiding the regulatory and financial requirements associated with an IPO. In order for a reverse acquisition to happen smoothly, the publicly traded company is usually a shell corporation, that is, one with only an organizational structure and little or no activity. The two businesses can then merge the private company's product(s) with the public company's structure. It also makes initial trading less dependent on market conditions, a key risk in IPOs. However, it is important to note that a reverse acquisition only provides the private company with more liquidity if there is a real market interest in it.

reverse takeover

the TAKEOVER of one company by another company which has a lower stock market valuation (i.e. the value of the bidder's ISSUED SHARE CAPITAL traded on the stock market is less than that of the victim firm). A reverse takeover bid usually involves the bidding firm issuing shares or raising LOAN CAPITAL to finance the deal.

reverse takeover

a situation in which a smaller but dynamic company wishing to expand rapidly takes over a larger but unprogressive company, issuing SHARES or FIXED INTEREST FINANCIAL SECURITIES to raise the necessary finance to purchase the shares of the larger co mpany. See TAKEOVER.
References in periodicals archive ?
These decisions caused considerable debate, with some commentators expressing the view that they would cruel reverse takeovers (which are allowable under section 611 of the Corporations Act).
This is not a definitive template for the planners of future reverse takeovers: the Panel rarely issues cut and dried sets of guidelines.
In this study, reverse takeovers were dominated by mining companies, including foreign acquisitions of Canadian firms.
The 83 firms examined were identified as reverse takeovers by search within EBSCOhost, an on-line, multidisciplinary index for journals and periodicals.
Like another Liverpool business success story, Cains, Midas used a reverse takeover to steer its course towards the stock market.
Tinopolis has joined the Alternative Investment Market after its reverse takeover of Acquisitor was agreed earlier this week.
Taskcatch has listed on AIM and bought five-a-side football pitch operator Skylark in a pounds 1.05 million reverse takeover.
Siwei become publicly traded by taking over Hong Kong-listed ERA in a reverse takeover. In turn, Caterpillar announced it was buying ERA in 2011, saying the deal would allow it to find more customers in China.
So what are the advantages of reverse takeovers, and are we likely to see more in the future?
THE former engineering consulting arm of Welsh utilities group, Hyder, has listed on the London Stock Exchange via a reverse takeover.
Mr Noon added that while relatively uncommon, reverse takeovers are attractive to target companies since they offer so much in one fell swoop - not just the enlarged group and the synergies that come with it, but a listing and access to the public markets, too.
Under Hong Kong's rules, a substantial asset injection within two years after a takeover of a listed company is considered a reverse takeover, which is vetted by the stock exchange as if it were an IPO, requiring all the regulatory approvals.