Rough Guide to UK Corporate
What The Heck Are Corporate Takeovers…
…And Why Do They Matter To Me?
Corporate takeovers are a common feature in the business
news - usually involving one company buying another one
for a staggering sum of money.
But what does it all mean? In this guide, we'll attempt
to untangle the jargon surrounding takeover deals and explain
what they are all about.
What's A Takeover?
Types of Takeover
Why Are There So Many Takeovers?
What's A Takeover?
Put simply, a takeover is when one company buys another publicly-traded company. 'Publicly traded' simply means that their shares can be bought and sold on the stock market by anyone.
The company doing the bidding (buying) doesn't have to be publicly traded, but they often are.
The idea is that the bidding company will purchase enough of the target company's stock to gain overall control of that company.
How Does It Affect Me?
If you or a fund you invest in own shares in a company that is involved in a takeover, your shares are likely to change in value as a result of the takeover.
How they will change isn't always clear.
If You Own Shares in the Target Company
More often than not, shares in a company that is being taken over will rise in value - partly because the company bidding will have to offer a premium for each share they purchase in order to get shareholder agreement.
This means they will buy each share for more than its current market price - an instant profit if you're lucky!
If You Own Shares in the Bidding Company
Shares in the company doing the bidding can go up or down, depending on a range of factors.
If market analysts think the company being bought is a 'good fit' for the bidding company, its shares could rise. On the other hand, if the markets think that the company being purchased is not a good fit or is overpriced, shares in the acquiring company can easily fall.
Read on Rough
Guide to Corporate Takeovers
Do I Get Paid For My Shares?
Are There So Many Takeovers?
for UK Corporate Takeovers