presentation about hostile takeover
- 2. INTRODUCTION A hostile takeover is a type of corporate acquisition or merger which is carried out against the wishes of the board (and usually management) of the target company. • A hostile takeover is the acquisition of one company (called the target company) by another (called the acquirer) that is accomplished by going directly to the company's shareholders or fighting to replace management to get the acquisition approved. A hostile takeover can be accomplished through either a tender offer or a proxy fight. • The key characteristic of a hostile takeover is that the target company's management does not want the deal to go through. Sometimes a company's management will defend against unwanted hostile takeovers by using several controversial strategies, such as the poison pill, the crown- jewel defense, a golden parachute or the Pac-Man defense.
- 3. BREAKING DOWN 'Hostile Takeover' • A hostile takeover bid occurs when an entity attempts to take control of a firm without the consent or cooperation of the target company's board of directors. In lieu of the target company's board approval, the would-be acquirer may then issue a tender offer, employ a proxy fight or attempt to buy the necessary company stock in the open market. To deter the unwanted takeover, the target company's management may have preemptive defenses in place, or it may employ reactive defenses to fight back. • Factors playing into a hostile takeover from the acquisition side often coincide with those of any other takeover, such as believing that a company may be significantly undervalued or wanting access to a company's brand, operations, technology or industry foothold. Hostile takeovers may also be strategic moves by activist investors looking to effect change on a company's operations.
- 4. TYPES OF HOSTILE TAKEOVER • Tender offer – Offer above market price. • Creeping tender offer – Furtively acquire shares with aim to obtain majority. • Proxy fight – Access to vote of change of board of directors through large shareholders • Open market - Company A buys a majority of the available shares in Company B on the open market, thus taking control of Company B. This may not always be possible as the majority of shares may be in the hands of private investors and not in holdings of financial institutions, available for purchase.
- 5. REASONS OF HOSTILE TAKEOVER • Capable of generating more profit in the future. • To gain control over the shares.
- 6. Advantages • Increase shareholder value. • Increase companies worth . • Shareholders to recognise the real value of their investment. • Increase wealth and productivity. • Disadvantages • Burden companies with debt loads. • Employees are laid of work from work.
- 7. MERGERS • Is the combination of two things , especially companies into one . • A merger is an agreement that unites two existing companies into one new company. There are several types of mergers and also several reasons why companies complete mergers. Mergers and acquisitions are commonly done to expand a company’s reach, expand into new segments, or gain market share. All of these are done to please shareholders and create value ACQUISITION An acquisition is a situation whereby one company purchases most or all of another company's shares in order to take control. An acquisition occurs when a buying company obtains more than 50% ownership in a target company. As part of the exchange, the acquiring company often purchases the target company's stock and other assets, which allows the acquiring company to make decisions regarding the newly acquired assets without the approval of the target company’s shareholders.