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Chapter 12

Regulatory authorities have the power to block the takeover completely, or to allow it
to proceed subject to certain conditions being met. For example the combined entity
might be required to sell off some of its retail outlets after the acquisition.

6.2 Specific examples of takeover regulation

Example 1

Principle of equal Squeeze-out rights Mandatory-bid
treatment condition through
– allow the bidder to sell out rights
– all shareholder force minority
groups must be shareholders to sell, at – allows remaining
offered the same a fair price, once the shareholders to exit
terms. bidder has acquired a the company at a fair
specific percentage of price once the bidder
Main purpose is to the target company’s has accumulated a
ensure that minority equity. certain number of
shareholders are shares.
offered the same level Main purpose is to
of benefits as majority enable the acquirer to Main purpose is to
shareholders. gain a 100% stake of ensure that the
the target company acquirer does not
and prevent problems exploit its position of
arising from minority power at the expense
shareholders at a later of minority
date. shareholders.

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