Analyze Hostile Take-over Bid from a Comparative Perspective
Introduction
Hostile takeover was originated from the countries such as U.K. and United States. There are four major conditions constitute the hostile takeover:
1) The subject of hostile is listed company.
2) The goal of the hostile takeover is to achieve the control power of the target company.
3) And the motivation of hostile takeover has received the opposition of the management board of the target company.
4) And there is obvious equity decentralization exists in such listed companies which will be hostile taken over.
The essential principle of hostile takeover is that the buyer can takeover its target company by buying large amount of the company shares without the confirmation and cooperation of the management organ of the target company. After the bidder has become the new controlling shareholder, the original management board of the target company will be dismissed. However, from one hand, hostile takeover has the function of eliminating the low-efficiency management board, and it can reduce the agency cost and improve the efficiency of internal corporate governance, and it can form an external supervision mechanism to urge the management board to work efficiently to increase the operation level and profits. Under the pressure of losing job, it can be a great impetus of the management board to try all efforts to work hard and increase the efficiency of operating the company. Due to the performance of the listed companies can be reflected by the share value on the security markets. Bad performance of the company’s operation will be reflected by the low price of the share value, so such kind of listed companies will be the target of the hostile takeover raiders; on the other hand, it also have some negative impacts to the target company. For example, due to the long-term operation of the company, all the management board have already established stable and good relationship in the markets, after the hostile takeover the management board will be replaced totally, however, all the human resources, supply chains, trade relationship and sales channels which have been established by the board will be cut off. Therefore, the condition will be negative for the future development of the target company due to the newly established management board need to try hard to build the new relationship in the markets and with the other companies. At the same time, the interests of the minority shareholders will be damaged, too. So how to regulate hostile take over and play the positive effects and prevent their side effects is an issue which worth our further thinking.
We will start the analysis of the hostile take-over from the perspective of U.S.A, EU(U.K) and China. In fact, the hostile take-over phenomenon of the company is prosperous in U.K. and U.SA. while China hasn’t such rich experiences in the hostile take-over bid.
U.K.: the earliest hostile takeover took place in U.K. According to the research of F.Zhang , the hostile takeover first happened in U.K. due to the following three causes:
1) Obvious changes occur in the ownership structure of the English companies after second world war. Ownership decentralization, the steady increase of the ownership property of the institutional investors, all of the above-mentioned factors have created the useful conditions for the separation of the ownership and control right o
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