Takeover.pptx

PRESENTATION ON “TAKEOVER DEFENCES” Presented By: Vinit Gaikwad (MITU17MBAG0017)

TAKEOVER • A takeover, or acquisition, is usually the purchase of a smaller company by a larger one. It can produce the same benefits as a merger, but it doesn't have to be a mutual decision. • An acquisition by purchase of a controlling interest in the share capital of another existing company.

TYPES OF TAKEOVER Friendly Takeover Hostile Takeover Reverse Takeover Back-Flip Takeover

Friendly Takeover • Acquisition through negotiations and with willingness and consent of the acquired company’s Board of Directors.

Hostile Takeover It arises when Board of Directors of the acquiring company decide to approach the shareholders of the target company directly through a Public Announcement (Tender Offer) to buy their shares consequent to the rejection of the offer made to the Board of Directors of the target company.

Reverse Takeover •

A type of takeover where a private company acquires a public company. • This is usually done at the instigation of the private company. • The purpose being for the private company to effectively float itself while avoiding some of the expense and time involved in a conventional IPO.

Back-Flip Takeover • Is any sort of takeover in which the acquiring company turns itself into a subsidiary of the purchased company. • This type of takeover can occur when a larger but less well-known company purchases a struggling company with a very well-known brand.

TACTICS USED BY ACQUIRER

TACTICS USED BY ACQUIRER

Casual Pass

Bear Hug

Dawn Raid Open Market Purchases and Street Sweeps Saturday Night Special

Proxy Fights

Tender Offer

Defence Tactics used by target Company Grey Nights

Defence Tactics used by target Company

Crown Jewels Poison Pill People Pill Scorched Earth Pac man Green Mail White Nights Golden Parachutes

White Square

ADVANTAGES OF TAKEOVER • • • • • • • • •

Increase in sales/revenues Venture into new businesses and markets Profitability of target company Increase market share Decreased competition Reduction of overcapacity in the industry Enlarge brand portfolio Increase in Economies of scale. Increased efficiency as a result of corporate synergies/redundancies • Expand strategic distribution network

DISADVANTAGES OF TAKEOVER • Goodwill, often paid in excess for the acquisition • Culture clashes within the two companies causes employees to be less-efficient or despondent • Reduced competition and choice for consumers in oligopoly markets • Likelihood of job cuts • Cultural integration/conflict with new management • Hidden liabilities of target entity • The monetary cost to the company • Lack of motivation for employees in the company being bought • Domination of a subsidiary by the parent company, which may result in piercing the corporate veil

THANK YOU