Definition Of Takeover Agreement

Insidious acquisitions can also involve activists who increasingly buy shares in a company to create added value by changing management. A takeover by militants would probably be gradual over time. Some target companies use defensive tactics to avoid a hostile takeover. Undervalued SOEs are more vulnerable to hostile acquisitions because the public owns the majority of the company`s shares. A preventive measure involves the acquisition of a significant portion of its own shares, which prevents the acquisition company from acquiring the shares and becoming a majority shareholder. A company may sue the beneficiary company to defend itself against the acquisition, or restructure its assets and liabilities to prevent another company from benefiting financially from a buyback transaction. Some companies may opt for a strategic buyout. This allows the purchaser to enter a new market without taking any additional time, money or risk. The purchaser may also be able to eliminate competition through a strategic acquisition. When negotiating an acquisition agreement, the guarantee should take into account the following issues: from the company`s point of view, the acquisition may be advantageous, as it may allow the company to reduce its production and distribution costs, acquire brand names, expand its existing activities or enter new sectors or eliminate inconvenient competition and increase its market power. In terms of their broader impact on the functioning of market processes, acquisitions can, on the one hand, promote greater efficiency in the use of resources and, on the other hand, reduce the efficiency of resource allocation by reducing competition.

In short, they can have both pros and cons (see LER FOR MORE EXPLICATIONS). Under FAIR TRADING ACT 1973, acquisitions that create or extend a company`s market share over a given product above 25%, or where the value of acquired assets exceeds $70 million, may be referred by the OFFICE OF FAIR TRADING to the Competition Commission to determine whether or not they are of public interest. SEE ALSO ASSET, COMPETITION POLICY (UK), COMPETITION POLICY (EU), WILLIAMSON TRADEOFF MODEL, HORIZONTAL INTEGRATION, VERTICAL INTEGRATION, DIVERSIFICATION, CITY CODE, MARKET ENTRY. The acquisition or acquisition of a business generally involves the assumption of a set of individual assets, all of which represent the value of the business itself.