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Takeover Management
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    As per the Regulation 2(1) (b) of the Takeover Code, SEBI specifies the term Takeover as an “acquisition” as “directly or indirectly, acquiring or agreeing to acquire shares or voting rights in, or control over, a target company”

    Key elements of a takeover

    It’s an attempt to take over the control of a company which is already registered.
    The shares are purchased from the shareholders of a company to an extent of controlling the interest and thereby gaining control.

    Types of takeovers as per law

    Friendly takeover – Negotiation happens between the promoters of a company and the investors in a friendly manner to further some common objectives as per Section 395 of the Companies Act, 1956.
    Bail-out takeover – Takeover of a financially sick company by a finically well-off company to bail them out from losses as per Sick Industrial Companies (Special Provisions) Act, 1985

    Hostile takeover where the investors actively pursue the takeover without the knowledge of other company attempted through a public tender offer. as per SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

    Corporate Raiders – Making an offer to shareholders after the board of directors have refused or by completely bypassing them.

    Types of takeovers as per business context

    Horizontal Takeover – Happens between companies from the same industry. The main purpose is increasing the market share or achieving economies of scale. Example Lipton India and Brooke Bond, Bank of Madura with ICICI Bank.

    Vertical Takeover – Happens between companies operating at different stages of production within the same industry. Example is Tata Motors acquiring 80% stakes in Trilix Srl

    Conglomerate takeover – Happens between companies operating in totally different industries. The main purpose of this kind of takeover is diversification. Example Reliance Industries (RIL) taking over Reliance Petroleum (RPL)

    Benefits of a Takeover

    External Growth whereby firms can expand horizontally, vertically and in conglomerate direction.
    Diversification into alike markets or increase sales
    Vertical Integration by linking a series of sequentially related input assembly operations
    Reducing costs and redundancies, enhance economy of scale

    Downsides of a Takeover

    Eliminate healthy competition and fair trade and encourage monopoly
    At times Goodwill may be paid in excess
    Culture clash within two companies and retrenchment
    Dominance of the parent company
    Hidden liabilities within the target company

    Terms in Use


    A person who, directly or indirectly, acquires the share or the voting right whether by himself or through or with persons acting in concert or control over a target company.

    Target Company A company that is listed on any stock exchange and whose shares or voting rights are to be acquired.


    Any person who is in control of the target company named in the offer document or shareholding pattern.


    The right to directly or indirectly appoint a majority of directors on the Board of the target company, control management or policy decisions affecting such company.

    Direct Acquisition

    Is an acquirer directly acquiring shares, voting rights, or control of the targeted company.

    Indirect Acquisition

    Where the acquirer indirectly exercises or direct the exercise of voting rights of a target company, the acquisition of which would otherwise attract the obligation of making an open offer as per regulations

    Open offer

    It’s an opportunity to exit their investments in no inferior terms viz a viz their initial investment. It lays down the norms like the pricing, timing, manner, even exemption or relaxation

    Document Required

    Mandates To Be Met

    The SEBI’s Regulations, 2011 also referred to as the “ Takeover Code” regulates the taking over of stakes in an Indian listed companies. It also looks after the interest of public shareholders of an acquired company and that enough room is left for shareholders to give an exit leeway. It also puts forth provision to ensure that the security market in India operates on a fair and transparent basis.
    The growing level of M&A activity in India, the increasing sophistication in managing takeovers.
    In a takeover bid without an agreement of the victim firm’s the company buying 50% or more of voting shares of the other so as to exercise effective control over it
    It is essential to make an ‘open offer’ to the public shareholders (regardless of their shareholding levels) where the acquirer’s holding is 25% or more.
    It also lays down norms related to steps taken by companies to resist hostile turnover. Tactics such as buyback of shares, inter-se transfer of shares amongst promoters, relatives and acquisitions by other friendly companies to avoid hostile takeovers.

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      Defense against hostile takeover

      Poison Pill

      Introduction of shareholders’ right plans where the targeted company dilutes its shares such that the hostile bidder cannot obtain a controlling share without massive expenses.

      Flip-in pill where the company issues preferred shares that only existing shareholders can buy thereby diluting the hostile bidder’s potential purchase.

      Segregates the board of directors into groups and putting a handful of them in one election delaying the entire board to be reelected.

      White Knight defense where the company may seek the help of a friendlier firm and offer them to buy controlling shares before the hostile bidder does.

      Crown jewel defense where target company sells off most attractive assets to a friendly 3rd party or spin off the valuable assets in a separate entity.

      Safe harbours where a target company will acquire a troublesome firm in order to make acquisition potentially unattractive.

      Why MUDS:

      MUDS is a team of highly qualified and experienced professionals. We provide a wide-range of services like Audits – Statutory & Internal, Corporate law Consultancy, Facilitating Joint Ventures / Collaborations, Direct Listing and Delisting for startups, Filing for Permissions for Foreign Investments into India from Foreign Investment Promotion Board and RBI.

      Mergers, Acquisitions and Take-overs

      The firm devotes sufficient manpower and resources to matchup to constantly changing macro environment related to Merger and Acquisition (M&A) scene in India. MUDS has played an active role facilitating Mergers and Acquisition and help ensure complete compliance with the takeover code.

      Act as a financial advisor and facilitate appointment of merchant banker during an open offer
      Make the prescribed announcements and disclosures on behalf of the acquirer.
      Operate and manage the Escrow account for deposit consideration
      Ensure the accuracy of the contents of all the announcements including:
      Furnish to SEBI a due diligence certificate along with filing of PA, disclosing all the relevant details in DPS & submit draft of LOO, provide clarification to SEBI in draft of LOO on acquirer’s behalf
      Documents related to disclosure of acquisition during offer period and closure of tendering period
      File a report with SEBI within 15 working days from the expiry of the tendering period,
      Confirming status of completion of various open offer requirements.
      Setting up of the offer price and upward offer price during an open offer
      Completion of all obligations by acquirer like payment of consideration and release of escrow funds
      Establish a process for paying the offer price through listed shares, secured debt instrument, convertible debt security.


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