14.3 : Takeovers

A takeover is a strategic action where one company gains control over another by acquiring a significant portion of its equity or assets. This process is often used to strengthen market position, secure valuable resources, or acquire capabilities aligned with the acquirer's objectives. Takeovers can occur through acquisitions, proxy contests, and going-private transactions.

Acquisitions are the most direct form of takeover, involving the outright purchase of a company or a controlling stake in its operations. This enables the acquirer to integrate the target's resources, technologies, and market presence, fostering rapid growth or diversification. Acquisitions can be friendly, mutually agreeable, or hostile, where the target resists the proposal.

Proxy contests, by contrast, involve influencing corporate governance. Investors persuade shareholders to vote for a proposed management team or board of directors, enabling them to steer corporate decisions without owning a majority stake. This approach often enacts strategic or operational changes without a complete takeover.

Going-private transactions transition a public company into private ownership by purchasing all public shares or merging with a private entity. These transactions, initiated by private equity firms, management, or investors, remove the company from public scrutiny, allowing for long-term restructuring and strategic focus.

Takeovers are essential tools for businesses aiming to expand or transform their operations. The success of these strategies depends on the alignment of objectives and the dynamics between the involved parties.