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Question

How does a Takeover work?

Answer

A takeover occurs when one company (usually a larger company, known as the Bidding company) attempts to take control over another company (usually a smaller company, known as the target company).

A takeover usually starts life as an elective event. This means that the shareholders of the target company choose whether or not they want the takeover to go ahead by accepting the offer. For a standard UK takeover a certain percentage of the target company's share capital is required for the offer to go ahead and this can happen in 3 stages (often referred to as 'ID's'):

  • Unconditional as to acceptances (meaning the offer can continue)
  • Unconditional in all respects (meaning the offer will go ahead)
  • Compulsory acquisition or 980 (meaning the bidding company has acquired over 90% of the target company's shares and will compulsory acquire the remaining shares, regardless of whether shareholders have accepted the offer or not). At this point it becomes non-elective or a mandatory event.

The company can revise or extend the deadline of the offer at any time and this process can take many months. We will write to you at each stage/extension of the offer, if we have enough time to do so, to give you the opportunity to take up the offer.

If we do not have time to issue a letter, we may attempt to email you with the information, or call you to see if you wish to accept the offer. After the offer has reached the Compulsory Acquisition stage, if you have not replied, we will automatically take up the default offer on your behalf unless you specifically ask us not to and confirm to us that you are applying to the
Courts to dissent to the offer.

 

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