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Bust up takeover |
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Bust up takeoverA leveraged buyout in which the buyer sells off the assets of the target-company to repay the debt that financed the takeover.Bust up takeover Similar MatchesTakeoverTakeoverThe acquisition of one business or company by another, either on an agreed or hostile basis.The susceptibility of a company to takeover depends on who controls the majority of shares in issue and which shares have the voting rights. Some companies have two classes of shares, one class with voting rights and the other not. In such a case, control of the company can rest with shareholders who don't have a majority of shares but do have a majority of votes.Private companies can defend themselves relatively easy because their shares tend to be closely held. Public companies are more vulnerable because a predator can go out into the market and quietly build up its holding by buying shares. There are strict rules about the conduct and timing of a takeover bid:A shareholder who owns 30% or more of a company' shares has to offer to buy all the other shares at the highest price the shares have achieved in the previous 12 months. This is known as a mandatory bid.Otherwise, a predator can announce its intention to bid for a company, and if it does so, the takeover clock immediately starts running. They have 28 days to post their bid or offer document to shareholders. When the bid has been posted (Day 1 on the clock), the target has 14 days to post its defence document. Day 39 is the last day on which a target can publish new information about itself such as trading forecasts, profit or dividend forecasts, or assets values. Day 46 is the last day the bidder can announce new terms. And the bid must close on Day 60, unless a new bidder emerges in which case the clock goes back to the beginning.Note that the predator company does not have to follow through with its bid. In its bid document it can make its offer conditional on receiving a certain number of acceptances from shareholders, or on the bid not being referred to the Office of Fair Trading. But the bid must go unconditional by Day 60 (or it lapses altogether), and once a bidder has 50% acceptances it can declare the bid unconditional, giving shareholders who haven't yet responded 14 days to make up their minds.Once a bidder has over 90% of the shares in a company, it can compulsorily buy out the remaining 10% of shareholders in order to acquire full control, and those shareholders have no choice but to accept the offer. Panel on Takeovers and MergersPanel on Takeovers and MergersThe City watchdog whose job is to oversee the conduct of takeovers involving companies listed on the London Stock Exchange.The Panel writes and enforces the City Code on Takeovers and Mergers, which sets out in meticulous detail the management and timing of takeover bids. The objective of the City Code is to ensure that high standards of integrity and fairness are maintained, and that shareholders in both bidding and target company are treated equitably.The Panel is not concerned with the financial or commercial advantages or disadvantages of a takeover, nor is it concerned with competition issues.The City Code does not have the force of law, but, as the Code says 'those who seek to take advantage of the facilities of the securities markets in the United Kingdom should conduct themselves in matters relating to takeovers in accordance with best business standards and so in accordance with the Code'. It goes on to say that 'Those who do not so conduct themselves may find that, by way of sanction, the facilities of those markets are withheld.'Panel on Takeovers and MergersPO Box 226The Stock Exchange BuildingLondonEC2P 2JXTel: 020 7382 9026http://www.thetakeoverpanel.org.uk Takeover targetTakeover targetA company that is the object of a takeover attempt, friendly or hostile. City code on takeovers and mergersCity code on takeovers and mergersSee: Dawn raid Hostile takeoverHostile takeoverA takeover bid by one company for another, in which the directors of the target company oppose the bid. Their opposition may be temporary - in effect, a negotiating ploy to encourage a better offer from the bidder - and hostile bids can turn 'friendly' after a period of public posturing.Some countries, and indeed some companies, are more accepting of hostile takeovers than others. American and British companies tend to consider them part of the cut and thrust of public status, whilst Continental European and Asian business consider them very bad form even if they are unable to prevent them. Further SuggestionsHostile takeoverTakeover |
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