Ok so let’s say company A wants to buy company B. Do they speak with the board of company B to acquire them or with the shareholders?? If they speak with the board and they say no but the majority of the shareholders want to sell couldn’t they just fire the board?? But if they speak with the shareholders and the majority of them don’t want to sell how can a hostile takeover happen ???
In: Economics
It’s presented to the board, and then eventually has to be approved by a vote of shareholders.
Hostile takeovers happen when the acquiring company is able to buy 50% of shares or gain voting control of that many. All investors will sell for the right price, so they can just keep buying shares on the open exchange, even if it means they drive up the share price. They can gain control without 50% if they have allies, say a mutual fund or hedge fund who also own large stakes and agree with their move.
They go to the Board of B and ask.
If the Board says “No”, then A might mount a “hostile takeover” by going to the stockholders of B to get them to sell all their shares to A. If A has enough shares, it replaces the board and, not surprisingly, the board says “Yes”.
they talk to the management – the people (CEO, etc) the board hire to run the company. If management thinks the deal is worth pursuing then they will present it to their board for approval.
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