takeovers

Takeovers refer to the process by which one company acquires a controlling interest in another company. They can result in a merger, a sale of assets, or a change in control while the target remains a distinct legal entity. Takeovers are a central feature of corporate strategy and capital markets and can occur in any sector or jurisdiction.

There are friendly takeovers, in which the target company's management and board support the deal, and hostile takeovers, where the acquirer pursues control despite opposition. Common mechanisms include tender offers, in which the buyer offers to purchase shares directly from shareholders, and proxy fights, in which the acquirer seeks to replace the target's board. Leveraged buyouts, often led by private equity sponsors, use significant debt to finance the purchase.

Takeovers may be financed with cash, stock, or a combination. Valuation, due diligence, and negotiations determine the terms, price, and conditions for closing. The process typically requires regulatory approvals and consideration of antitrust laws. In the United States, the Williams Act governs tender offers and disclosure to shareholders.

Target-side defenses include poison pills, staggered boards, white knights, and other measures designed to deter unwanted bids. These defenses influence negotiation dynamics and deal outcomes.

Outcomes vary depending on execution and integration. Proponents cite potential synergies, efficiencies, and improved competitive position, while critics warn of value destruction, cultural clashes, or debt overhang. Public reaction, management changes, and long-term performance are key variables.