As a good part of investors know well, a takeover bid is the acronym for what a takeover really is Takeover bid. It is a complex operation whereby one or more individuals or companies offer to all shareholders of a listed company the purchase of their shares, or other securities that allow them to acquire them, in exchange for a price that has been previously stipulated. It is a movement that develops with a certain frequency among companies that are listed on the equity markets. In some cases, favoring your interests, but in others the opposite, to the point of generating serious investment problems.
A takeover bid is always a movement that you must bear in mind in your actions in the stock markets. It is special, because it will affect your money if the company where you have opened positions is a victim of this corporate movement. Where you can not forget that it is a remarkable fact that can help stocks go up or down based on the characteristics of the takeover bid. Not surprisingly, these offers are never developed under the same conditions, although they all seem very similar.
Of course, if the company where you are shareholders undergoes a takeover bid, you will have to do some accounts as it will affect the book value of your investment. Until a few years ago, there was a profile of small and medium investors who were dedicated to attracting listed companies of this nature with the aim of make the most of your savings and what is even more important in a very short space of time. Above other technical considerations and even from the fundamental point of view. Because a takeover bid is very important for a large number of investors, as you will be able to verify from now on.
Tender Offer: Classes of Offers
Before going to the most practical aspect of what constitutes a takeover bid, you will have no choice but to know that these corporate movements are not homogeneous, as many investors believe from the beginning. Of course it is not this way, but there are different ways of understanding what a takeover bid is. Because in effect, there are in the first place the so-called mandatory OPAS. In this specific case, they refer to companies that present a purchase offer for 100% of the shares of the company at an equitable price and that may not even be subject to any conditions.
On the other hand, there is the voluntary public offer of acquisition and that are characterized fundamentally because are not subject to legal requirements when it comes to your share price. However, this kind of takeover bid is not as frequent in the complicated sector of the bag. If not, on the contrary, they are linked to another class of companies that have nothing or little to do with prices on regulated markets. It is convenient that you take into account this important factor for a perfect understanding of what this purely corporate movement really means. Beyond other accounting and business considerations.
Transfer through shares
It is very important that you bear in mind that any takeover bid may materialize in cash. Although, of course, the most frequent thing is through an exchange of shares or participations, as is the case with companies that are included in the stock market indices of international equities. To the extent that you can participate in this business process yourself. That is, buying one or more shares in the companies that you can later make profitable if the price evolution is favorable for your interests as a small and medium-sized investor.
From this scenario, the fact about the price for which you can acquire these shares of listed companies becomes especially relevant. Since it is the will determine in the end the profit of the operation carried out through movements of these very special characteristics. In some cases, it can be very favorable to your interests and in others not so much. Or what is worse, become a terrible operation in which you can leave a lot of euros on the way. As surely it will have happened to you on more than one occasion. In this sense, do not forget that a takeover bid can be a double-edged sword, with completely opposite effects on its objectives.
What is the opt-out takeover bid?
There is another figure within this corporate and business movement that has a special relevance among small and medium investors, such as the delisting takeover bid. But what does this special takeover bid consist of? Well, it basically consists of selling the shares before the company stop trading on the stock market. However, historically this kind of stock market operations are not usually very satisfactory to defend your interests. If not, on the contrary, rather the opposite usually happens and does not help you at all to achieve capital gains in operations of these characteristics.
On the other hand, the so-called foreclosure takeover bid can get you trapped in a security too easily, as has happened in recent years. Even as it has developed in certain values of the Spanish stock market, with starting prices very far from those formalized in the purchase. In this way, it is an operation that will leave you very dissatisfied, among other reasons because you will be powerless in the face of a movement of these characteristics. Not surprisingly, there is very little you can do from that moment on. In this sense, you will have no choice but to assume the new reality that financial markets will determine from that moment on.
OPAS you consider as friendly
Of course, there is not just one type of takeover bid, but several and that you can apply an investment strategy in each of the cases. Another of the OPAS with which you can find are those called as friendly and that refer to when there is a real and tacit agreement between the company and the shareholders. The effect it produces among small and medium investors is not as aggressive as in the other OPAS. If not, on the contrary, it has a strong neutral component, which may neither benefit nor harm you.
Of course, the public acquisition offer of a contrary nature they are hostile OPAS and that they are perhaps the best known in the national and even international stock market scene. With completely unpredictable effects on what may happen to your investments. Because the reactions are very diverse depending on the new conditions imposed by the new shareholders. In this sense, you cannot forget that this kind of corporate movement is certainly very frequent in the equity markets. Even within the large companies that make up the most relevant stock market indices around the world.
Tips for trading with OPAS
From this scenario, a takeover bid is always a sign that something is happening in a listed company and the prices at which the operations are usually closed are clearly unpredictable, as on the other hand you can imagine from your approach as a small and medium investor. In any case, the National Securities Market Commission gives you a series of behavioral guidelines to face these corporate movements. Like the following that we expose you below:
- Going to an OPA is always voluntary. You as an investor will be the one who decides whether or not to sell your shares. The fact of not attending a takeover bid does not imply the loss of your shares.
- Always refer to the OPA brochure, regardless of what the media says.
- If as an investor you decide to go to the OPA, you must state it by presenting the acceptance order in the entity where your shares are deposited.
- Check with your entity the channels enabled to send your instructions.
- The offer acceptance period may not be less than 15 calendar days, nor greater than 70.
- You may revoke the acceptance order at any time before the last day of the offer acceptance period.
- In the event that there is more than one takeover bid for the same company, the shareholders may submit multiple declarations of acceptance, indicating the order of preference and that said declarations be made available to all competing bidders.
- Forced sale purchase (squezze out / sell out). They occur in OPAS launched on 100% of the shares of a company when the acceptance period has ended and there are still shareholders who have not sold (no more than 10%). In these cases, the offeror may require the shareholders to sell their shares at the price of the tender offer. Assuming the expenses of sale and settlement of the offeror. Like the shareholder, they may require the offeror to purchase their shares at the same price, and in this case, the shareholder will bear the expenses.