Sunkar Share Discussion Threads

[paulb10] 02/7/2014 20:42

Takeover
From Wikipedia, the free encyclopedia
This article is about the business term. For the science fiction series, see Hostile Takeover Trilogy. For other uses, see Takeover (disambiguation).

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (March 2008)

The examples and perspective in this article may not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (December 2010)
In business, a takeover is the purchase of one company (the target) by another (the acquirer, or bidder). In UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.

Contents [hide]
1 Types of takeover
1.1 Friendly takeovers
1.2 Hostile takeovers
1.3 Reverse takeovers
1.4 Backflip takeovers
2 Financing a takeover
2.1 Funding
2.2 Loan note alternatives
2.3 All share deals
3 Mechanics
3.1 In the United Kingdom
4 Strategies
5 Agency Problems
6 Pros and cons of takeover
7 Occurrence
8 Tactics against hostile takeover
9 See also
10 References
11 External links
Types of takeover[edit]
Friendly takeovers[edit]
A "friendly takeover" is an acquisition which is approved by the management. Before a bidder makes an offer for another company, it usually first informs the company's board of directors. In an ideal world, if the board feels that accepting the offer serves the shareholders better than rejecting it, it recommends the offer be accepted by the shareholders.

In a private company, because the shareholders and the board are usually the same people or closely connected with one another, private acquisitions are usually friendly. If the shareholders agree to sell the company, then the board is usually of the same mind or sufficiently under the orders of the equity shareholders to cooperate with the bidder. This point is not relevant to the UK concept of takeovers, which always involve the acquisition of a public company. The are also manager a good team for business lead generation.

Hostile takeovers[edit]
A "hostile takeover" allows a suitor to take over a target company whose management is unwilling to agree to a merger or takeover. A takeover is considered "hostile" if the target company's board rejects the offer, but the bidder continues to pursue it, or the bidder makes the offer directly after having announced its firm intention to make an offer. Development of the hostile tender is attributed to Louis Wolfson.

A hostile takeover can be conducted in several ways. A tender offer can be made where the acquiring company makes a public offer at a fixed price above the current market price. Tender offers in the United States are regulated by the Williams Act. An acquiring company can also engage in a proxy fight, whereby it tries to persuade enough shareholders, usually a simple majority, to replace the management with a new one which will approve the takeover. Another method involves quietly purchasing enough stock on the open market, known as a "creeping tender offer", to affect a change in management. In all of these ways, management resists the acquisition, but it is carried out anyway.

The main consequence of a bid being considered hostile is practical rather than legal. If the board of the target cooperates, the bidder can conduct extensive due diligence into the affairs of the target company, providing the bidder with a comprehensive analysis of the target company's finances. In contrast, a hostile bidder will only have more limited, publicly available information about the target company available, rendering the bidder vulnerable to hidden risks regarding the target company's finances. An additional problem is that takeovers often require loans provided by banks in order to service the offer, but banks are often less willing to back a hostile bidder because of the relative lack of target information which is available to them.

A well known example of an extremely hostile takeover was Oracle's hostile bid to acquire PeopleSoft [1]

Reverse takeovers[edit]
A "reverse takeover" is a type of takeover where a private company acquires a public company. This is usually done at the instigation of the larger, 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. However, in the UK under AIM rules, a reverse take-over is an acquisition or acquisitions in a twelve-month period which for an AIM company would:

exceed 100% in any of the class tests; or
result in a fundamental change in its business, board or voting control; or
in the case of an investing company, depart substantially from the investing strategy stated in its admission document or, where no admission document was produced on admission, depart substantially from the investing strategy stated in its pre-admission announcement or, depart substantially from the investing strategy.
An individual or organization, sometimes known as corporate raider, can purchase a large fraction of the company's stock and, in doing so, get enough votes to replace the board of directors and the CEO. With a new agreeable management team, the stock is a much more attractive investment, which would likely result in a price rise and a profit for the corporate raider and the other shareholders.

Backflip takeovers[edit]
A "backflip 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 such as Texas Air Corporation takeover of Continental Airlines but taking the Continental name as it was better known. The SBC acquisition of the ailing AT&T and subsequent rename to AT&T is another example.

Financing a takeover[edit]
Funding[edit]
Often a company acquiring another pays a specified amount for it. This money can be raised in a number of ways. Although the company may have sufficient funds available in its account, remitting payment entirely from the acquiring company's cash on hand is unusual. More often, it will be borrowed from a bank, or raised by an issue of bonds. Acquisitions financed through debt are known as leveraged buyouts, and the debt will often be moved down onto the balance sheet of the acquired company. The acquired company then has to pay back the debt. This is a technique often used by private equity companies. The debt ratio of financing can go as high as 80% in some cases. In such a case, the acquiring company would only need to raise 20% of the purchase price.

Loan note alternatives[edit]
Cash offers for public companies often include a "loan note alternative" that allows shareholders to take a part or all of their consideration in loan notes rather than cash. This is done primarily to make the offer more attractive in terms of taxation. A conversion of shares into cash is counted as a disposal that triggers a payment of capital gains tax, whereas if the shares are converted into other securities, such as loan notes, the tax is rolled over.

All share deals[edit]
A takeover, particularly a reverse takeover, may be financed by an all share deal. The bidder does not pay money, but instead issues new shares in itself to the shareholders of the company being acquired. In a reverse takeover the shareholders of the company being acquired end up with a majority of the shares in, and so control of, the company making the bid. The company has managerial rights.

Mechanics[edit]
In the United Kingdom[edit]
Takeovers in the UK (meaning acquisitions of public companies only) are governed by the City Code on Takeovers and Mergers, also known as the 'City Code' or 'Takeover Code'. The rules for a takeover can be found in what is primarily known as 'The Blue Book'. The Code used to be a non-statutory set of rules that was controlled by city institutions on a theoretically voluntary basis. However, as a breach of the Code brought such reputational damage and the possibility of exclusion from city services run by those institutions, it was regarded as binding. In 2006, the Code was put onto a statutory footing as part of the UK's compliance with the European Takeover Directive (2004/25/EC).[2]

The Code requires that all shareholders in a company should be treated equally. It regulates when and what information companies must and cannot release publicly in relation to the bid, sets timetables for certain aspects of the bid, and sets minimum bid levels following a previous purchase of shares.

In particular:

a shareholder must make an offer when its shareholding, including that of parties acting in concert (a "concert party"), reaches 30% of the target;
information relating to the bid must not be released except by announcements regulated by the Code;
the bidder must make an announcement if rumour or speculation have affected a company's share price;
the level of the offer must not be less than any price paid by the bidder in the three months before the announcement of a firm intention to make an offer;
if shares are bought during the offer period at a price higher than the offer price, the offer must be increased to that price;
The Rules Governing the Substantial Acquisition of Shares, which used to accompany the Code and which regulated the announcement of certain levels of shareholdings, have now been abolished, though similar provisions still exist in the Companies Act 1985.

Strategies[edit]
There are a variety of reasons why an acquiring company may wish to purchase another company. Some takeovers are opportunistic - the target company may simply be very reasonably priced for one reason or another and the acquiring company may decide that in the long run, it will end up making money by purchasing the target company. The large holding company Berkshire Hathaway has profited well over time by purchasing many companies opportunistically in this manner.

Other takeovers are strategic in that they are thought to have secondary effects beyond the simple effect of the profitability of the target company being added to the acquiring company's profitability. For example, an acquiring company may decide to purchase a company that is profitable and has good distribution capabilities in new areas which the acquiring company can use for its own products as well. A target company might be attractive because it allows the acquiring company to enter a new market without having to take on the risk, time and expense of starting a new division. An acquiring company could decide to take over a competitor not only because the competitor is profitable, but in order to eliminate competition in its field and make it easier, in the long term, to raise prices. Also a takeover could fulfill the belief that the combined company can be more profitable than the two companies would be separately due to a reduction of redundant functions.

Agency Problems[edit]
Takeovers may also benefit from principal–agent problems associated with top executive compensation. For example, it is fairly easy for a top executive to reduce the price of his/her company's stock – due to information asymmetry. The executive can accelerate accounting of expected expenses, delay accounting of expected revenue, engage in off-balance-sheet transactions to make the company's profitability appear temporarily poorer, or simply promote and report severely conservative (e.g. pessimistic) estimates of future earnings. Such seemingly adverse earnings news will be likely to (at least temporarily) reduce share price. (This is again due to information asymmetries since it is more common for top executives to do everything they can to window dress their company's earnings forecasts). There are typically very few legal risks to being 'too conservative' in one's accounting and earnings estimates.

A reduced share price makes a company an easier takeover target. When the company gets bought out (or taken private) – at a dramatically lower price – the takeover artist gains a windfall from the former top executive's actions to surreptitiously reduce share price. This can represent tens of billions of dollars (questionably) transferred from previous shareholders to the takeover artist. The former top executive is then rewarded with a golden handshake for presiding over the fire sale that can sometimes be in the hundreds of millions of dollars for one or two years of work. (This is nevertheless an excellent bargain for the takeover artist, who will tend to benefit from developing a reputation of being very generous to parting top executives). This is just one example of some of the principal–agent / perverse incentive issues involved with takeovers.

Similar issues occur when a publicly held asset or non-profit organization undergoes privatization. Top executives often reap tremendous monetary benefits when a government owned or non-profit entity is sold to private hands. Just as in the example above, they can facilitate this process by making the entity appear to be in financial crisis. This perception can reduce the sale price (to the profit of the purchaser) and make non-profits and governments more likely to sell. It can also contribute to a public perception that private entities are more efficiently run, reinforcing the political will to sell off public assets.

Pros and cons of takeover[edit]
While pros and cons of a takeover differ from case to case, there are a few reoccurring ones worth mentioning.

Pros:

Increase in sales/revenues (e.g. Procter & Gamble takeover of Gillette)
Venture into new businesses and markets
Profitability of target company
Increase market share
Decreased competition (from the perspective of the acquiring company)
Reduction of overcapacity in the industry
Enlarge brand portfolio (e.g. L'Oréal's takeover of Body Shop)
Increase in economies of scale
Increased efficiency as a result of corporate synergies/redundancies (jobs with overlapping responsibilities can be eliminated, decreasing operating costs)
Cons:

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. (Bad for consumers, although this is good for the companies involved in the takeover)
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.
Takeovers also tend to substitute debt for equity. In a sense, any government tax policy of allowing for deduction of interest expenses but not of dividends, has essentially provided a substantial subsidy to takeovers. It can punish more-conservative or prudent management that do not allow their companies to leverage themselves into a high-risk position. High leverage will lead to high profits if circumstances go well, but can lead to catastrophic failure if circumstances do not go favorably. This can create substantial negative externalities for governments, employees, suppliers and other stakeholders.

Occurrence[edit]
See also: Golden share
Corporate takeovers occur frequently in the United States, Canada, United Kingdom, France and Spain. They happen only occasionally in Italy because larger shareholders (typically controlling families) often have special board voting privileges designed to keep them in control. They do not happen often in Germany because of the dual board structure, nor in Japan because companies have interlocking sets of ownerships known as keiretsu, nor in the People's Republic of China because the state majority-owns most publicly listed companies.[citation needed]

Tactics against hostile takeover[edit]
There are several tactics, or techniques, which can be used to deter a hostile takeover.

Bankmail
Crown Jewel Defense
Flip-in
Flip-over
Golden Parachute
Gray Knight
Greenmail
Jonestown Defense
Killer bees
Leveraged recapitalization
Lobster trap
Lock-up provision
Nancy Reagan Defense
Non-voting stock
Pac-Man Defense
Pension parachute
People pill
Poison pill
Safe Harbor
Scorched-earth defense
Shark Repellent
Staggered board of directors
Standstill agreement
Targeted repurchase
Top-ups
Treasury stock
Voting plans
White knight
White squire
Whitemail
See also[edit]
Breakup fee
Control premium
Revlon Moment
Scrip bid
Squeeze out
References[edit]
Jump up ^ hxxp://hbr.org/product/oracle-s-hostile-takeover-of-peoplesoft-a/an/CG4A-PDF-ENG
Jump up ^ Eur-lex.europa.eu, LexUriServ-PDF
External links[edit]
Jarrell, Gregg A. (2002). "Takeovers and Leveraged Buyouts". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270 and 163149563
Acquisition Financing
[hide] v t e
Corporate finance and investment banking
Capital structure
Convertible debt Exchangeable debt Mezzanine debt Pari passu Preferred equity Second lien debt Senior debt Senior secured debt Shareholder loan Stock Subordinated debt Warrant

Transactions
(terms / conditions)
Equity offerings
At-the-market offering Book building Bookrunner Corporate spin-off Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Private placement Public offering Rights issue Seasoned equity offering Secondary market offering Underwriting
Mergers and
acquisitions
Buy side Control premium Demerger Divestment Drag-along right Management due diligence Pitch book Pre-emption right Proxy fight Sell side Shareholder rights plan Special situation Squeeze out Staggered board of directors Super-majority amendment Tag-along right Takeover Reverse Tender offer
Leverage
Debt restructuring Debtor-in-possession financing Financial sponsor Leveraged buyout Leveraged recapitalization High-yield debt Private equity Project finance
Valuation
Accretion/dilution analysis Adjusted present value Associate company Business valuation Cost of capital Weighted average Discounted cash flow Economic Value Added Enterprise value Fairness opinion Financial modeling Free cash flow Market value added Minority interest Modigliani–Miller theorem Net present value Pure play Real options Residual income Stock valuation Tax shield Terminal value Valuation using multiples
List of investment banks Outline of finance
Categories: Mergers and acquisitionsCorporate finance
Navigation menu
Create accountLog inArticleTalkReadEditView history

Main page
Contents
Featured content
Current events
Random article
Donate to Wikipedia
Wikimedia Shop
Interaction
Help
About Wikipedia
Community portal
Recent changes
Contact page
Tools
What links here
Related changes
Upload file
Special pages
Permanent link
Page information
Data item
Cite this page
Print/export
Create a book
Download as PDF
Printable version
Languages
Català
Deutsch
Eesti
Español
Euskara
Français
한국2612;
Hrvatski
Italiano
עבר;ית
Nederlands
日本#486;
Polski
Português
Рус;скl0;й
Укр;аїl5;сь 82;а
Tiếng Việt
Edit links
This page was last modified on 30 June 2014 at 12:19.
Text is available under the Creative Commons Attribution-ShareAlike License; additional terms may apply. By using this site, you agree to the Terms of Use and Privacy Policy. Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization.
Privacy policyAbout WikipediaDisclaimersContact WikipediaDevelopersMobile view

[paulb10] 02/7/2014 20:25

it looks to me that there is a reasonable chance that SAPC are not going to make their required amount of shares i.e. 90% but here comes the rub if the shareholders win and stop the takeover then what happens next. 1) do SAPC give up and the company is placed into liquidation and they then risk the 12 million that they have invested to be recovered by a receiver and they loose control of the total asset. If a receiver is appointed (MY FAVOURED POSITION) i.e. the receiver will look for a buyer for the whole company. OR will 2) SAPC will have enough votes to delist the company and take the company private then continue to run sunkar into the ground and lend them money for shares and dilute the PI shareholders into the ground. ???????????????????????????????

[faza3] 02/7/2014 19:20

you will get money ten days after the offer become unconditional this is 90%

you can not accelerate things

[faza3] 02/7/2014 19:15

speaking yes a broker only arrest your shares until spac has 90%

nothing to gain/ nothing to loss even after 8 can you sell your shares
good luck and see you on July 8

[danandrews] 02/7/2014 17:05

HSBC default position is reject offer. I would assume that this is an industry standard.

[one day soon1] 02/7/2014 17:04

Ok Well done!
Now looking like this:
LSE 4,654,481
ADVFN 11,427,949
iii 320,371

[one day soon1] 02/7/2014 17:01

Ok Well done!
Now looking like this:
LSE 4,654,481
ADVFN 11,395,735
iii 320,371

[singh is king] 02/7/2014 17:00

It's a no from my small holding of 32214.
Rather lose the little equity left.

[trigger blade] 02/7/2014 16:53

Add mine to your list. I've voted no with my 43,335 shares which I bought as a punt and I'd rather risk losing what's left than give up without a fight.

[oilbethere] 02/7/2014 16:42

Voted no for 125k shares held with NatWest brokers - just tried to check with NatWest but can no longer open corporate action details, but if my memory serves me correctly the default position was yes.

Have further 300k with IG but can't vote with these.

[one day soon1] 02/7/2014 15:51

How many shares backwoodsman?

[backwoodsman] 02/7/2014 15:14

My £200 worth (cost £3k) has a No vote

[danandrews] 02/7/2014 15:08

Crazy an asset valued $75m is being offered takeover for £6.2m!

[danandrews] 02/7/2014 15:01

Seem more nervous about Kazakhstan based workforce than shareholders.

[one day soon1] 02/7/2014 14:57

What does everyone make of today`s RNS?

[one day soon1] 02/7/2014 14:33

Thank`s dan!

Well based on that and the fact that if one does nothing it is counted as a NO then we will have a very good chance of having over 10.1%

UP The offer SAPC You aren't going to get away with paying so little.

[danandrews] 02/7/2014 13:36

Bases on your numbers; Of the market share we require in order to successfully reject this offer, we have 46.37%.

[one day soon1] 02/7/2014 13:27

LSE 4,604,481
ADVFN 11,227,400

A considerable amount so far! Anyone good at maths who can work out what percentage we have?

[faza3] 02/7/2014 07:24

takeover does not solve anything here SAPC does not give any financial proposals only 120 days 2.25mil injection

they have a buyer for a company

[danandrews] 01/7/2014 23:46

Perhaps Paul, i think SAPC will take over in the end...it's simply a matter at what price.

[paulb10] 01/7/2014 22:22

IF sunkar are a british owned company and if the no vote wins, and if sapc put the company into liquidation as promised then what. THEY sapc put the company into liquidation, or a bank, or an unpaid supplier puts the company into liquidation. THEN the UK courts will appoint a receiver, then the receiver will try to sell the business for the most money they can get. First they will try to cover their own costs then they will try to pay off the secured creditors i.e. banks, then they will try to pay off the unsecured creditors i.e. suppliers, then they will try to gain as much money as they can to give money back to the owners i.e. shareholders. Under these circumstances SAPC will, have NO SAY WHAT SO EVER and all their holdings are up for sale including the directors, and ours. The receivers will attempt to to get the best price for the company they can possibly get and put the company up for sale 100% and will contact any and all companies like BHP billiton etc to buy 100% interest in the company. In order to get the maximum price for the company they WILL attempt to get a bid war going. IF a decent receiver is appointed in the UK say price waterhouse, who only answer to a uk court they are pretty much incorruptible and will be very capable. I certainly think they could orchestrate a better price then whats on offer.

I KNOW WHAT I FAVOUR

[danandrews] 01/7/2014 19:11

No doubt that SAPC are simply driving an extremely hard bargain, the notion they would announce bankruptcy and lose control of this asset is ridiculous. They have got the board and company exactly where they want them. The board were either naive or culpable in allowing themselves to get in this position.


HSBC today confirmed the offer to me - I rejected

[faza3] 01/7/2014 18:23

I spoke with the takeover panel

Extension of the offer is possible depending on the results on July 8

he wants all 90% or he will announces bankruptcy of his own company which he owns in 51%

it's like a gun measured to someone's head and still someone buys

01/07/2014 16:21 GBX/ISDX-exn New 20,809 1.71
01/07/2014 13:46 GBX/ISDX-exn New 5,460 1.74
01/07/2014 13:34 GBX/ISDX-exn New 93,490 1.74
01/07/2014 13:32 GBX/ISDX-exn New 96,000 1.74
01/07/2014 13:27 GBX/ISDX-exn New 129,100 1.74
01/07/2014 11:37 GBX/ISDX-exn New 62,620 1.71

I do not know why somebody is trying to hide those buying

[one day soon1] 01/7/2014 16:47

LSE Total 4,340,481

ADVFN Total 11,227,400

[danandrews] 01/7/2014 13:01

Thanks for the confirmation Miss Ann. This is good news!
I tend to agree with faza, i would suspect PI's in the hundreds... if that...certainly not the thousands.

one day soon - social media is certainly a good idea, i would recommend twitter. FB would be a waste of your time. I think targeting PI's outside of the iii,lse or advfn forums at this late stage would be near impossible. However this would be more for voicing your disapproval and highlighting your concerns to the media/other users etc.

2 views, we have the thieves rattled.

Faza did you get anywhere with the takeover panel?