Tender Offers, Takeovers, Buyouts
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1. A tender offer is when a party offers to pay a specific price (in cash) for a specified number of shares in a company. The shares may be enough to control the company, or the investor may be trying to purchase all shares in the company. Tender offers are made for some amount over the current market price, which provides current stockholders with incentive to sell their existing shares, and are advertised in business journals and through brokers. If the investor does not receive enough shares offered (tendered) to meet his requirements, he may withdraw the offer. If more shares are tendered than were requested, the investor may purchase the additional shares on a prorated basis. This is a departure from the procedure in the 1960s when investors were able to either purchase the shares on a prorated basis, or purchase shares on a first-come, first-served basis.A hostile takeover is a takeover that occurs when someone (or a group of investors) considered hostile to the current management of an organization purchases an adequate amount of stock to control a company. Hostile takeovers can be compared to friendly takeovers, in which all parties agree to the transaction. Hostile takeovers generally result in significant changes in the organization, either in management changes, or in the way the company is operated. In some cases, divisions of the newly acquired company are sold off and the new owners take profit from the sale. In this way, hostile takeovers can resul
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eholders, and that other stakeholders, including employees and the community at large, are not to be considered in these decisions. The theory is that if the company is run poorly enough to where it is unable to make the best use of its resources, then it will shortly go out of business and these same stakeholders will be possibly worse off than under a takeover scenario.
This argument notwithstanding, the actions of the 1980s have led to increased calls for attention to the moral responsibility that accompanies taking over a company and the ramifications that such takeovers have for the various stakeholders in the organization.
2. There are no inherent rights that pass to long-term employees, customers and suppliers of companies that are taken over. While some takeover targets are provided with special incentives for long-term employees and managers, few, if any, provisions are typically made for customers and vendors. In cases where the company is sold off piecemeal, its customers must find new suppliers, and its vendors must find new customers to replace the lost business. However, if the company is worth more sold off than operating as a continuing entity, it may well be that its customer is already shrinking, and that
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Approximate Word count = 4803
Approximate Pages = 19 (250 words per page)
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