A takeover is a type of acquisition in which one company gains control over another company by purchasing a majority stake or sufficient voting shares.
The company acquiring control is called the acquirer.
The company being acquired is called the target.
Takeovers can be friendly (agreed by both companies) or hostile (target company resists).
Key difference from regular acquisitions:
Takeover usually emphasizes control and management dominance, and sometimes happens against the will of the target company (hostile takeover).
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Nature of Takeover
1. Control-Oriented – The main objective is to obtain control of the target company.
2. Unidirectional – Only one company gains control; the other loses independence.
3. Can be Friendly or Hostile – Depends on the agreement of the target company’s board.
4. Legally Enforceable – Requires compliance with corporate and securities regulations.
5. Strategic Objective – Often used to expand market share, acquire technology, or eliminate competition.
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Features of Takeover
1. Two Parties – Acquirer and Target.
2. Acquisition of Shares – Control is obtained by buying majority voting shares.
3. Objective – Usually to control operations and decision-making of the target.
4. Duration – Can be a quick process if friendly, or prolonged in hostile takeovers.
5. Regulatory Compliance – Requires approval from SEBI (India) or other regulators.
6. Types:
Friendly Takeover – Target management agrees to the acquisition.
Hostile Takeover – Acquirer bypasses management and goes directly to shareholders.
