Mergers and Acquisitions Merger A transaction where two firms agree to integrate their operations on a relatively coequal basis because they have resources and capabilities that together may create a stronger competitive advantage Acquisition A transaction where one firm buys another firm with the intent of more effectively using a core competence by making the acquired firm a subsidiary within its portfolio of businesses Takeover An acquisition where the target firm did not solicit the bid of the acquiring firm
A company mails a letter to the directors of the takeover target announcing the acquisition proposal and requiring the directors to make a quick decision on the bid.
If approval cannot be obtained, the acquiring company can appeal directly to the stockholders by means of a tender offer, unless the management and directors of the target firm hold enough stock to retain control.
Voluntary contract in which the stockholder who is bought out agrees not to make further attempts to take over the company in the future.
When a standstill agreement is made without a buyback, the substantial stockholder simply agrees not to increase his or her ownership which presumably would put him or her in an effective control position.