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Take-over bid

An offer made to the shareholders of a company by a person or organization to gain control of the company. If the company is quoted on the Stock Exchange, the bidder is expected to observe certain recommendations. There is a similarity with the highway code in that though the recommendations have no legal force they cannot be flouted with impunity.

If a person owns a certain proportion of the shares of the company, a minimum of 90 per cent, he can apply to the court for an order entitling him to purchase the shares he does not already hold at a price approved by the court. Similarly, the shareholders may insist that their shares are purchased.

Reference: The Penguin Business Dictionary, 3rd edt.