15.1: Types of Takeovers Flashcards
What is a takeover?
The transfer of control from one ownership group to another.
What is an acquisition?
The purchase of one firm by another.
What is a merger?
The combination of two firms into a new legal entity.
What is a cash transaction in the context of takeovers?
The receipt of cash for shares by shareholders in a target company.
What is a share transaction in the context of takeovers?
The offer by an acquiring company of shares or a combination of cash and shares to the target company’s shareholders.
What is an amalgamation?
A genuine merger in which both sets of shareholders must approve the transaction.
What is a going private transaction or issuer bid?
A special form of acquisition where the purchaser already owns a majority stake in the target company.
What is a fairness opinion?
An opinion provided by an independent expert regarding the true value of a firm’s shares, based on an external valuation.
What are the key differences between an acquisition and a merger?
- Acquisition: The purchase of one firm by another, where the acquired firm ceases to exist.
- Merger: The combination of two firms into a new legal entity, with both sets of shareholders needing to approve the transaction.
What is the significance of the majority of the minority rule?
The rule ensures that a majority of the minority shareholders approve the special resolution to amalgamate two companies, protecting minority shareholders’ interests.
