What is a Takeover?
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)