Takeover

An offer made by tender setting out a proposal by one company to purchase the shares of another company, in order to acquire control of it. Takeovers can be ‘friendly’ or ‘hostile’. A ‘friendly’ takeover is an acquisition that is approved by the management. Before a bidder makes an offer for another company, it usually first informs the company’s board of directors. If the board of directors considers that accepting the offer best serves the shareholders, it recommends that the offer be accepted. A ‘hostile’ takeover allows the bidder to take over a company whose management is unwilling to agree. The takeover becomes hostile the moment the board of directors rejects the offer but the bidder continues to pursue it.