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CS Executive · Capital Market and Securities Laws · Acquisition of Shares and Takeovers - Concepts

Lakshmi Steels Ltd, a sick company with heavy losses and defaults to lenders, is taken over by Bharat Alloys Ltd under a rehabilitation arrangement approved by lenders, so that the company revives and jobs are saved. This is best called:

This is a bailout takeover. The target is financially sick and is acquired under a lender-approved rescue plan to revive it and protect employment. It differs from a hostile takeover, where management resists, and from creeping acquisition, which is a gradual increase in shareholding.

  1. AHostile takeover
  2. BFriendly takeover through a merger of equals
  3. CBailout takeoverCorrect
  4. DCreeping acquisition

Explanation

A bailout takeover is the acquisition of a financially sick company, often under a rescue or rehabilitation plan involving lenders, to revive it. Hostile means opposed by the target; creeping acquisition means gradual stake increase.

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