PRESENTATION ON

“TAKEOVER DEFENCES”

Presented By: Vinit Gaikwad

(MITU17MBAG0017)
 TAKEOVER
• A takeover, or acquisition, is usually the
purchase of a smaller company by a larger
one. It can produce the same benefits as a
merger, but it doesn't have to be a mutual
decision.
• An acquisition by purchase of a controlling
interest in the share capital of another existing
company.
TYPES OF TAKEOVER

Friendly Takeover

Hostile Takeover

Reverse Takeover

Back-Flip Takeover
 Friendly Takeover
• Acquisition through negotiations and with
willingness and consent of the acquired
company’s Board of Directors.
 Hostile Takeover
It arises when Board of Directors
of the acquiring company decide
to approach the shareholders of
the target company directly
through a Public Announcement
(Tender Offer) to buy their
shares consequent to the
rejection of the offer made to
the Board of Directors of the
target company.
 Reverse Takeover
• A type of takeover where a
private company acquires a
public company.
• This is usually done at the
instigation of the 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.
 Back-Flip 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.
TACTICS USED BY ACQUIRER
Casual Pass

Bear Hug

TACTICS USED BY ACQUIRER

Dawn Raid

Open Market Purchases

and Street Sweeps

Saturday Night Special

Proxy Fights

Tender Offer
Defence Tactics used by target
Company
Grey Nights

Crown Jewels

Defence Tactics used

by target Company
Poison Pill

People Pill

Scorched Earth

Pac man

Green Mail

White Nights

Golden
Parachutes

White Square
 ADVANTAGES OF TAKEOVER
• Increase in sales/revenues
• Venture into new businesses and markets
• Profitability of target company
• Increase market share
• Decreased competition
• Reduction of overcapacity in the industry
• Enlarge brand portfolio
• Increase in Economies of scale.
• Increased efficiency as a result of corporate
synergies/redundancies
• Expand strategic distribution network
 DISADVANTAGES OF TAKEOVER
• 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
• 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
• Domination of a subsidiary by the parent company, which may
result in piercing the corporate veil
THANK YOU