Types of takeover

1. TAKEOVER

2. INTRODUCTION
• A takeover occurs when one company makes a bid to assume
control of or acquire another, often by purchasing a majority
stake in the target firm. In the takeover process, the company
making the bid is the acquirer while the company it wishes to take
control of is called the target.
• Definition : A takeover or acquisition is the purchase of one
company by another. We call the purchaser the bidder or
acquirer, while the company it wants to buy is the target. It is a
type of merger, but not of equals. In the case of an acquisition,
there is a predator and a prey.
• In the UK, the term refers to the acquisition of a public company
whose shares are listed on a stock exchange, in contrast to the
acquisition of a private company.

3. TYPES OF TAKEOVER
• There are 4 types of takeover:
• Friendly-A friendly takeover is an acquisition which is approved by the
management of the target company. Before a bidder makes an offer
for another company, it usually first informs the company's board of
directors. In an ideal world, if the board feels that accepting the offer
serves the shareholders better than rejecting it, it recommends the
offer be accepted by the shareholders.
• Hostile-A hostile takeover allows a bidder to take over a target
company whose management is unwilling to agree to a merger or
takeover. A takeover is considered hostile if the target company's
board rejects the offer, and if the bidder continues to pursue it, or the
bidder makes the offer directly after having announced its firm
intention to make an offer.
• Reverse-A reverse takeover is 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.
• Backflip-A backflip 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.

4. ADVANTAGES
• market expansion
• huge customer reach
• monopoly in the market dominance
• decrease in the tax payment
• increase in the number of employees and reach to skilled, efficient
and effective manpower
• decrease in the debt payment
• increase in the reserve and surplus
• decrease in the liabilities
• increase in the popularity of the company
• huge transaction on a daily basis due to large number of customers

5. DISADVANTAGES
AND IMPACT
• High cost involved - with the takeover price often proving too high
• Problems of valuation (see the price too high, above)
• Upset customers and suppliers, usually as a result of the disruption involved
• Problems of integration (change management), including resistance from
employees
• Incompatibility of management styles, structures and culture
• Questionable motives
Why takeovers fail?
• Price paid for takeover was too high (over-estimate of synergies)
• Lack of decisive change management in the early stages
• The takeover was mishandled
• Cultural incompatibility between the two businesses
• Poor communication, particularly with management, employees and other
stakeholders of the acquired business
• Loss of key personnel & customers post acquisition
• Competitors take the opportunity to gain market share whilst the takeover
target is being integrated

6. EXAMPLES OF TAKEOVER
Johnson & Johnson Takeover of Crucell
• Pharmaceutical and health care giant
& Johnson announced the successful
completion of a Friendly Takeover of Dutch
vaccine maker Crucell which employs 1,300
people, produced more than 115 million
doses of vaccine in 2009 for distribution in
about 100 countries, for about 1.75 billion
euros ($2.37 billion). Johnson & Johnson and
Crucell jointly announced that Johnson &
Johnson has completed the tender offer for
Crucell. Johnson & Johnson, which employs
114,000 people, has said it intends to retain
Crucell’s management and staff and to keep
the headquarters at Leiden in the western
Netherlands. Johnson & Johnson now owns
more than 95 percent of Crucell’s capital. The
European Commission authorized
the takeover seeing no competition
InBev and Anheuser-Busch
• In June 2008, Euro-Brazilian beverage
company, InBev, made an unsolicited bid for
iconic American beer brewer, Anheuser-
InBev offered to buy Anheuser-Busch for $65
a share in a deal that valued its target at $46
billion.

7. • The takeover quickly turned hostile as both sides traded lawsuits and accusations. InBev filed to have
Anheuser-Busch's entire board of directors fired as part of a proxy battle to gain control of the
company. The deal took on a soap opera-like quality as it pitted Busch family members against one
another for control of the 150-year-old company. Eventually, InBev upped its offer to $52 billion or
$70 a share, an amount that swayed shareholders to accept the deal. After the acquisition, the
combined company became Anheuser-Busch Inbev (BUD).
Godrej Soaps and Gujarat Godrej Innovative Chemicals
• Ex. Godrej Soaps — profitable and with a turnover of ₹437 crore — did a reverse merger with loss-
making Gujarat Godrej Innovative Chemicals (turnover of ₹60 crore), the resulting firm was named
Godrej Soaps
DullCo and Hotshot Inc
DullCo is a large company that has fallen on relatively hard times because the massive recall of one of
its biggest-selling products has hurt its finances and caused large-scale customer defections.
Management decides that its brand has suffered irreparable damage, and decides to use its financial
resources, which are still substantial, to acquire smaller and fast-growing rival Hotshot Inc. DullCo’s
management also decides that business after the completed takeover will be conducted under the
Hotshot name, which will be the surviving entity, with DullCo becoming a Hotshot subsidiary.

8. CONCLUSION
• Market Expansion
• Technological Sharing
• Knowledge Sharing
• Change in stocks
• Impact on Job Security

9. THANK YOU