Takeover Bid

Key Highlights

• A takeover bid is a public offer made by an individual, company, or group (the bidder or acquirer) to purchase a significant or controlling interest in another company (the target), usually by acquiring its shares.

• The aim is to gain control over the target company’s management and operations.

What is Takeover Bid?

A takeover bid is a public offer made by an individual, company, or group (the bidder or acquirer) to purchase a significant or controlling interest in another company (the target), usually by acquiring its shares. The aim is to gain control over the target company’s management and operations.

Key Features

• Public Offer: The bidder reaches out directly to the target company’s shareholders, usually with a formal announcement.

• Gaining Control: If successful, the bidder ends up with enough shares to call the shots at the target company.

• Regulated Process: Securities regulators (like SEBI in India or the SEC in the US) keep an eye on things to ensure it’s fair and transparent.

Types of Takeover Bids

• Friendly: The target company’s bosses are on board and support the deal.

• Hostile: The target’s management isn’t happy and tries to block it.

• Mandatory: Required by law if someone buys a certain percentage of shares.

• Partial: The bidder only wants a portion of the shares, not total control.

How It Works?

• Announcement: The bidder says, “Hey, we want to buy your shares!”

• Offer Document: Shareholders get a detailed letter explaining the price, terms, and why the bidder wants the company.

• Decision Time: Shareholders have a limited time to say yes or no.

• Regulatory Check: Regulators may need to approve the deal.

• Done Deal: If enough shareholders sell, the bidder takes control.

Purpose of Takeover Bid

To grow the business, enter new markets, grab new tech, or work more efficiently.
Sometimes, it’s a move to knock out a competitor.