To better understand how it works, look at this example. An investor addresses the shareholders of Company A, whose shares are sold at 15$US per share. The investor offers $25 per share to shareholders, but the offer is conditional on the investor being able to acquire more than 50% of the total outstanding shares of Company A. The buyer will make its obligation to make the purchase subject to a certain threshold of participation of the target shareholder until a given date (usually at least 20 days after the takeover bid). Typically, this threshold is a majority (> 50%), which is the minimum necessary to legally move to the next step without having to negotiate with minority shareholders. In addition to the traditional approach to merger described above, the acquisition can also be done by simply allowing the buyer to acquire the shares of the target entity by directly and publicly offering to acquire them. Imagine instead that a buyer is negotiating with LinkedIn management, he simply went directly to the shareholders and offered them cash or shares in exchange for each LinkedIn share. This is an offer to purchase (if the acquirer offers cash) or an exchange offer (if the acquirer offers shares). It is also important to note that takeover offers can be made and completed without the target company`s board of directors authorizing the sale to shareholders. The person or persons who wish to acquire the shares address themselves directly to the shareholders. If the board of directors of the target company does not approve the agreement, the takeover bid effectively constitutes a “hostile takeover”Hostile TakeoverA hostile acquisition of mergers and acquisitions (M&A) is the acquisition of a target company by another company (called an acquirer) by directly in the shareholders of the target company, either through a takeover offer, or by proxy voting. The difference between a hostile attempt and a friendly attempt.
Microsoft`s acquisition of LinkedIn in June 2016 is an example of a traditional merger: LinkedIn`s management conducted a Sell-Side process and invited several bidders, including Microsoft and Salesforce. LinkedIn signed a merger agreement with Microsoft, and then granted a merger power that got shareholder approval (it wasn`t necessary to get Microsoft shareholder approval, as it was a net money deal). Apart from a highly concentrated shareholder base, which would facilitate a 100% full purchase in a single step (convenient for private purposes with a small number of shareholders with whom to trade directly), share purchases are influenced by what is called a two-tier merger. The first step is the takeover bid (or exchange offer), in which the acquirer aims for a majority stake, and the second, seeks to preserve 100% ownership. In this step, the acquirer must reach a certain ownership threshold that legally allows him to crush minority shareholders (see below). After the merger is approved by the target shareholders, the target shares are discounted, all shares are exchanged for cash or acquisition shares (in the case of LinkedIn, these are all cash) and the target shares are cancelled. As a legal benchmark, there are several ways to structure a merger. The most common structure is a reverse triangular merger (also known as a reverse subsidiary), in which the acquirer creates a temporary subsidiary in which the objective is merged (and the subsidiary is dissolved): a takeover bid is a proposal made by an investor to the shareholders of a publicly traded companyPrivate v.
The main difference between a private company and a public company is: that the shares of a public limited company are traded on a share while the shares of a private company are not. . . .