The differences between an acquisition and a takeover
While an acquisition and a takeover both result in new owners for a Texas company, there are differences between the two. Generally, a takeover may be done with or without the consent of the company that is acquired. An acquisition generally occurs when two companies mutually agree to the purchase. When an acquisition occurs without the consent of a company’s board, it is referred to as a hostile takeover.
To prevent such a takeover, a company may buy back a majority of its shares for an above-market price. A company may also restructure its assets and liabilities in a way that makes a takeover less attractive from a financial standpoint. The company may also file a lawsuit claiming that the takeover would result in the violation of anti-trust laws. Whether a company is taken over or acquired amicably, the acquiring company must file notice with the SEC 30 days prior to the acquisition.
In the event of an acquisition, the purchasing company will do its due diligence to determine a fair purchase price. To circumvent shareholder approval, the assets of a company may be purchased instead of the company’s stock. When the two sides agree to the terms of the acquisition, it generally must be submitted to regulators for approval or meet other legal guidelines.
Acquisitions of a public company must generally involve approval from shareholders, a company’s board or from regulators. Therefore, it may be worthwhile to talk to a business attorney prior to performing the acquisition. This may make it easier to create an agreement or conduct a takeover that may conform to the law even if shareholders or others try to block it. An attorney may also help a business do its due diligence during the buying process to ensure that it gets the best value.
Source: The Houston Chronicle , “rose Johnson “, November 21, 2014