M&A Approaches

Question 1

Casual pass

Answer 1

An informal inquiry made to management (e.g., email / call) to discuss an acquisition (indirectly or directly).

Question 2

Bear hug

Answer 2

Letter to management demanding a rapid response - often made public and without warning.

Question 3

On-market takeover bid

Answer 3

Acquirer purchases shares off the open market - generally unsuccessful unless majority of shareholders are willing to sell.

Far less common than off-market bids.

E.G: CIMIC’s (construction contractor) takeover of UGL (diversified engineering) (2016)

Question 4

Off-market takeover bid

Answer 4

Direct solicitation to individual shareholders. Compulsory acquisition initiates once 90% is reached. Pre-bid stake up to 19.9% can be acquired.

Can be friendly (endorsed by board) or hostile (more common)

Subject to various terms (non-binding, no shop/talk, matching right)

Question 5

Scheme of arrangement

Answer 5

Transfer of shares in the target to bidder in return for consideration under Part 5.1 of the Corp. Act

Question 6

Proxy contest

Answer 6

Acquirer seeks to gain shareholder support to change the board or vote in favour of the acquisition.