When a company approaches another company to acquire them do they speak with the shareholders or with the board of directors?? And how exactly does a hostile takeover happen if the majority of the owners don’t wanna sell???

Question

Ok so let’s say company A wants to buy company B. Do they speak with the board of company B to acquire them or with the shareholders?? If they speak with the board and they say no but the majority of the shareholders want to sell couldn’t they just fire the board?? But if they speak with the shareholders and the majority of them don’t want to sell how can a hostile takeover happen ???

In: Economics

Answer 1

It’s presented to the board, and then eventually has to be approved by a vote of shareholders.

Hostile takeovers happen when the acquiring company is able to buy 50% of shares or gain voting control of that many. All investors will sell for the right price, so they can just keep buying shares on the open exchange, even if it means they drive up the share price. They can gain control without 50% if they have allies, say a mutual fund or hedge fund who also own large stakes and agree with their move.