Hostile Takeover and Defenses
Hostile Takeover And Defenses
Acquisitions are ordinarily done through negotiations . Negotiations are always done with the maximum holder of shares , the effective owners say who are able to transfer over 50% shares . By this method not only ownership of the company is acquired but also smooth takeover of the Board of the company and employees is possible by way of agreement . But in the case of Hostile Takeover ( not negotiated or friendly takeover ) while attempting the takeover by the bidder several steps are taken by the existing owners to ward off the takeover attempt in a way the ownership control of shares or of the management is not achieved . Even in cases where ownership control is successful , easy transition of control on board of directors and management is made difficult , This is to take more time for the existing owners to acquire and have control, of majority shareholding . Hostile takeover ordinarily happens only when the persons in control of management own less than 51% voting rights . This also happens at a time when the company is not performing well and the share prices are low .
Negotiated settlements involve bargaining , due diligence and result in friendly takeovers with very little resistances and most of the areas of concern are sorted out through agreement between the parties but in Hostile Takeover many of the steps stated above are absent which have its own weaknesses .
Resistances to hostile takeover and its intensity depend to a large extent on the different groups holdings , differences among the management and shareholders and the shareholding pattern .
Hostile takeover is never easy as the aggressive and opportunistic attempt of the bidders are often resisted by a section of the shareholders and management . Nevertheless preparedness for such an eventuality arise particularly when majority shareholding is less than 51% .
Ordinarily in case of joint venture or investment by a majority partner of the promoter ,
Acquisitions are ordinarily done through negotiations . Negotiations are always done with the maximum holder of shares , the effective owners say who are able to transfer over 50% shares . By this method not only ownership of the company is acquired but also smooth takeover of the Board of the company and employees is possible by way of agreement . But in the case of Hostile Takeover ( not negotiated or friendly takeover ) while attempting the takeover by the bidder several steps are taken by the existing owners to ward off the takeover attempt in a way the ownership control of shares or of the management is not achieved . Even in cases where ownership control is successful , easy transition of control on board of directors and management is made difficult , This is to take more time for the existing owners to acquire and have control, of majority shareholding . Hostile takeover ordinarily happens only when the persons in control of management own less than 51% voting rights . This also happens at a time when the company is not performing well and the share prices are low .
Negotiated settlements involve bargaining , due diligence and result in friendly takeovers with very little resistances and most of the areas of concern are sorted out through agreement between the parties but in Hostile Takeover many of the steps stated above are absent which have its own weaknesses .
Resistances to hostile takeover and its intensity depend to a large extent on the different groups holdings , differences among the management and shareholders and the shareholding pattern .
Hostile takeover is never easy as the aggressive and opportunistic attempt of the bidders are often resisted by a section of the shareholders and management . Nevertheless preparedness for such an eventuality arise particularly when majority shareholding is less than 51% .
Ordinarily in case of joint venture or investment by a majority partner of the promoter ,