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Question

What is a Takeover?

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).

Examples of a Takeover:

1. If the bidding company offers shareholders of the target company cash in exchange for their shares, an example of this could be:

  • GBP3 for each share held 
  • Therefore if you hold 100 shares in the target company you would receive GBP300 in exchange for your share

2. If the offer was a share offer, an example of this could be:

  • 3 new shares for every 2 shares held
  • Therefore if you hold 100 shares in the target company you would receive 150 new shares in the bidding company in exchange for your shares.
    E.g (100/2 = 50x3 = 150 new shares)

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