Skip to content

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

Rao Pharma Ltd's board rejects an open offer made by Kapoor Holdings, calling the price inadequate. Kapoor Holdings continues by making a public announcement directly to shareholders to tender their shares. Which feature makes this a hostile takeover?

The acquirer proceeding with the offer despite the target board's opposition makes it hostile. In a hostile takeover the acquirer goes directly to shareholders without management's consent, whereas distress of the target relates to a bailout takeover and nationality or offer size is irrelevant.

  1. AThe target is in financial distress and needs rescue
  2. BThe acquirer proceeds despite the target management's oppositionCorrect
  3. CThe acquirer is a foreign company
  4. DThe offer is for less than 25 percent of shares

Explanation

A hostile takeover is one pursued without the consent of the target's management, by appealing directly to shareholders. The financial distress option describes a bailout. The nationality of the acquirer and the offer size do not define hostility.

Did you get it right without looking?

One question tells you little. A timed set on Acquisition of Shares and Takeovers - Concepts shows your real accuracy, how long you take and where you lose marks.

Practise Acquisition of Shares and Takeovers - ConceptsFree diagnostic mock

More Acquisition of Shares and Takeovers - Concepts questions