Definition of takeover

Benefits of takeover and disadvantage

1. TAKEOVERTAKEOVER
IndexIndex
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Definition of TakeoverDefinition of Takeover
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Why company do takeover of another company?Why company do takeover of another company?
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When Company do takeover of another company?When Company do takeover of another company?
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Which companies can be takeover?Which companies can be takeover?
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Purpose of TakeoverPurpose of Takeover
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Type of TakeoverType of Takeover
a.a.Friendly TakeoverFriendly Takeover
b.b. Hostile TakeoverHostile Takeover
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Advantage of TakeoverAdvantage of Takeover
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Disadvantage of TakeoverDisadvantage of Takeover
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Procedure of TakeoverProcedure of Takeover

2. Definition of TakeoverDefinition of Takeover

A takeover bid is an offer to purchase enough share of a A takeover bid is an offer to purchase enough share of a
company to overtake the current majority shareholder. company to overtake the current majority shareholder.
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Takeover implies acquisition of control of a Company Takeover implies acquisition of control of a Company
which is already registered through the purchase or which is already registered through the purchase or
exchange of shares. exchange of shares.
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Takeover takes place usually by acquisition or purchase Takeover takes place usually by acquisition or purchase
from the shareholders of a company their shares at a from the shareholders of a company their shares at a
specified price to the extent of at least controlling interest in specified price to the extent of at least controlling interest in
order to gain control of the company.order to gain control of the company.

3. Why company do takeover of Why company do takeover of
another company?another company?

if the smaller company have proven their profitability if the smaller company have proven their profitability

for seeking finance to grow their products which have high for seeking finance to grow their products which have high
demand may attract the attention for an acquisition demand may attract the attention for an acquisition

be avenue for larger acquiring companies to grow their be avenue for larger acquiring companies to grow their
company company

Small companies may become a takeover target if they fill a Small companies may become a takeover target if they fill a
niche in the market that the bidder operates within. niche in the market that the bidder operates within.

4. When Company do takeover of When Company do takeover of
another company?another company?

When company has a good market value and When company has a good market value and
want to become bigger company, then want to become bigger company, then
companies try to purchase or included another companies try to purchase or included another
company to itself company. company to itself company.

5. Which companies can be takeover?Which companies can be takeover?

Any private company having good share and Any private company having good share and
market value can be takeover of small market value can be takeover of small
company. company.

6. Purpose of TakeoverPurpose of Takeover

Takeover mains purpose to make bigger or Takeover mains purpose to make bigger or
larger company from a small Company. larger company from a small Company.

7. Types of TakeoverTypes of Takeover

Friendly TakeoverFriendly Takeover
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Hostile TakeoverHostile Takeover

8. Friendly TakeoverFriendly Takeover

When a bidding company attempts to buy the When a bidding company attempts to buy the
majority shares without informing the board of majority shares without informing the board of
directors first, this is considered a hostile directors first, this is considered a hostile
takeover. takeover.

9. Hostile TakeoverHostile Takeover

When the board rejects the friendly takeover When the board rejects the friendly takeover
offer, the bidder may choose to continue offer, the bidder may choose to continue
pursuing shareholders without the input of the pursuing shareholders without the input of the
board of directors.board of directors.

10. Advantage of TakeoverAdvantage of Takeover

To Increased sales and revenue, increased To Increased sales and revenue, increased
market share and economies of scale.market share and economies of scale.

11. Disadvantage of TakeoverDisadvantage of Takeover

Job cuts as a result of a takeover is a Job cuts as a result of a takeover is a
disadvantage to the employee and reduced disadvantage to the employee and reduced
competition and choice for consumers.competition and choice for consumers.

12. Procedure of TakeoverProcedure of Takeover

A company may acquire the shares of a unlisted company A company may acquire the shares of a unlisted company
through what is called acquisition under Section 395 of the through what is called acquisition under Section 395 of the
Companies Act, 1956. Companies Act, 1956.
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where the shares of the company are widely held by the where the shares of the company are widely held by the
general public, it involves the process as set out in the SEBI general public, it involves the process as set out in the SEBI
(Substantial Acquisition of Shares and Takeovers) (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997, as amended in 2002, 2004 and 2006. Regulations, 1997, as amended in 2002, 2004 and 2006.

The term ‘Takeover’ has not been defined under SEBI The term ‘Takeover’ has not been defined under SEBI
(Substantial Acquisition of Shares and Takeovers) (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997.Regulations, 1997.

13. Thank YouThank You