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 ?
Nevertheless, it is a significant development, because the Panel has sent a clear message that it will not back away from its preparedness to intervene in reverse takeovers.
It will be remembered that the Panel twice ruled in favour of Noble Group against the reverse takeover of Gloucester Coal that would have resulted from Gloucester's bid for Whitehaven Coal.
A reverse takeover may also offend the principles in sections 602(a) and (c).
However, circumstances where reverse takeovers are suitable will continue to remain relatively rare.
As well as the normal advantages of any acquisition such as synergies and costs savings, a reverse takeover will always have significant commercial advantages.
Where a reverse takeover opportunity is available, the attractions in terms of business rationale and deal rationale make it compelling compared to other options.
The company gained its place on the AIM after Acquisitor shareholders agreed the reverse takeover and a change of the company's name to Tinopolis at an extraordinary general meeting on Monday.
Following the reverse takeover, Ron Jones will become executive chairman of Tinopolis plc and Arwel Rees will become managing director.
The reverse takeover makes Tinopolis the latest Welsh business to join the AIM and the first of 2005.
The 157-year-old brewery owned by brothers Sudarghara and Ajmail Dusan, will enter the AIM via a reverse takeover of the already listed Preston-based pub operator Honeycombe Leisure.
A reverse takeover is not necessarily simpler, quicker or cheaper than an initial public offering - although, invariably they are friendly mergers and should, therefore, proceed more smoothly than might be the case in a contested or hostile takeover," he said.
Consequently, a reverse takeover should not be viewed as a simple way of achieving a listing - the regulatory and disclosure requirements which apply are no less rigorous.