One is that you may bid up to 29,9% of a company’s shares before making a full bid, but after that you must make a full offer for all the remaining shares, at the highest price you have paid for the shares so far.
Another basic rule is that shareholders must be treated equally, and when an offer is announced, the share transaction must be reported by all parties to the city Take-over Panel, the Stock exchange, and financial press.
If the ground rules for take-overs are negotiable, the reason for the voting shares in a company gives the power to appoint directors and control the policies of that company. For what purpose?
To buy shares at a bargain price. If shares are good value it seems logical to buy as many as possible. This could lead to asset-stripping where the break-up value of the company is higher than the price of the shares.
To enjoy economies of scale as a result of the enlarged operations. If unit costs can be reduced, pricing policies can be more flexible and profits increased.
To eliminate competition.
To secure future supplies at a reasonable price. Thus, a company owning a chain of supermarkets may take over a factory processing a variety of foods. This is called backward integration.
To ensure markets for the goods or services of the parent company. This might be where a company making shoes, take over one owning a chain of shoe shops. This is called forward integration.
To benefit from a policy of diversification, a company becoming involved in a wide variety of activities.
To rescue an ailing company, in which case the impetus for the take-over might come from the company, which is seeking to take over. Management buy-outs might be included in this category.
How can a company combat a suspected take-over bid? One way is to avoid a situation here shareholders are unaware of the true value of their shares. Accountants and auditors are expected to be prudent, but a policy of prudence can lead to low dividends. Low dividends can lead to low share prices, and that is the ideal setting for take-over.
2016-04-21 03:44:46
Finance:
United Kingdom - 2008
This country is suffering the recession because of the world financial crisis at the moment. The three biggest banks were partially nationalized, as many smaller banks had bankrupts. Government has injected 50 billion of pounds and in return it received part of the stock of "Royal Bank of Scotland" (RBS), "Lloyds TSB" and “HBOS”. The strategy to end the recession in the country is to spend money in all possible ways. To do that, UK government has lowered the value added tax from 17,5% to 15% for a period of one year. The government has also made a present for all pensioners – it gave 60 pounds to each of the pensioner for Christmas time.
As United Kingdom is not afraid to spend money in recession time, its debt in 2007 was 43 billion pounds and in 2008 it increased up to 78 billion pounds and in 2009 it can be as large as 118 billion – eight percent of the all GDP.
More and more people are getting fired, because many firms bankrupts or lowers the number of employees. It can be seen in the table, that during the January - February 2008, the unemployment has increased by one percent. The average time worked per week for males is 40 hours, but there are many people, who work up to 45, 50 or even 60 or more hours per week. Females works for 38-40 hours at average. The current inflation rate in the country is 3,1 percent.
By concluding, there is a possible risk for United Kingdom to bankrupt as a country, if the so called “money-spending” strategy will not succeed.
2016-09-26 10:04:35
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