Hostile takeover
A hostile takeover is a bid that the bidder advances despite opposition from the target board. The bidder may seek support directly from shareholders, subject to applicable takeover law and market rules. A hostile label describes the board's position rather than proving the transaction is illegal or that the target's shareholders oppose it. Evaluation considers the offer, target defences, financing, potential value and regulatory constraints. Specific voting thresholds and permissible defences depend on jurisdiction and date.
Worked example
The target board rejects a bidder's proposal as undervaluing the business. The bidder proceeds with an offer to shareholders under the applicable rules; shareholders must assess the price and conditions.
Common mistake
Assuming a hostile bid is automatically unlawful or that buying any number of shares on the market always transfers control.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Direct | September 2026–June 2027 |