Takeover bid, OPA: what it is – Dictionary of Economics

Takeover bid concept

A ‘takeover bid’ (OPA) is a stock market transaction whereby a person or entity makes an offer to buy all or part of the shares of a listed company at a specified price.

Takeover bids are operations motivated by exceptional demand for shares and allow the acquisition of many shares of a company in a quick and organized way, which if carried out through ordinary operations on the stock market could be very expensive, since the continued demand would make the price of shares much more expensive. this action.

All the relevant information (securities to which it is directed, the monetary or non-monetary consideration, expenses, terms, conditions and purpose of the operation, acceptance and settlement procedures, etc.) must be specified in the ‘prospectus of the takeover bid’, which must be approved by the CNMV and is freely available for consultation.

Functions of a takeover bid

The takeover bid fulfills two functions: on the one hand, it makes it easier for the purchaser to obtain a large package of shares at a single time and at a certain price, and on the other hand, it allows all shareholders to sell under equal conditions. For shareholders to attend the offer and sell their shares, the price offered in a takeover bid is higher than the market price at that time (generally between 10% and 20% higher).

It is mandatory to launch a takeover bid for 100% of the shares, in three cases:

– Take the control. Acquire more than 30% of a listed company or other variants of takeover contemplated by law.

– Delisting from the stock market. When a company decides to go public.

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– Capital reduction. As it is a significant modification of the bylaws, 100% of the shareholders must be allowed the possibility of selling their shares.

The price of these last two takeover bids is not free to protect the interests of the shareholders and must be authorized by the CNMV, since the company’s shares are purchased by itself with a charge to reserves and, subsequently, either transferred to third parties or reduces its capital in the same proportion as the shares acquired.

In the face of a takeover bid, the shareholders of the ‘takeover bid’ company can choose to go to it or not. Once the term of the offer has elapsed, it is checked whether the acceptances exceed the minimum required and if so, the shares are sold to the company that has carried out the takeover bid; in the event that the shares that accept the offer exceed the maximum requested, they will be prorated; and if they do not reach the minimum, the takeover bid may be annulled.

When the board of directors of the ‘opada’ company does not agree with the operation, it is said to be a ”. Otherwise, when there is agreement between boards of directors, we speak of a ”.

There may be ”, when the offer affects securities for which another takeover bid has already been presented in which the acceptance period has not yet expired.

Finally, in the case of takeover bids launched for 100% of the shares, if at the end of the term, 90% or more of the shares have accepted the offer:

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– The offeror can demand the forced sale (‘sell out’) to the rest of the shareholders who did not attend the takeover bid.

– Any shareholder may require the bidder to buy their shares at the price offered (‘squezze out’).

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Xavier Puig. Doctor in Business Administration and Management and director of the Banking and Finance programs at UPF Barcelona School of Management.

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