Compulsory Acquisition of Shares Following a Takeover Bid. A takeover bid is where a bidder makes an offer to acquire the shares of all of the shareholders on the same terms. The Act outlines the process of a takeover bid, facilitating a fair sale for all shareholders. The takeover laws under the Act usually only apply to listed companies or companies with more than 50 members. Suppose a person makes a takeover bid for a company but still has less than 100% interest in the company. That bidder may decide to compulsorily acquire the remaining shares. This is permissible because ASIC believes that when the terms of a takeover bid receive overwhelming acceptance, the bidder should be able to acquire any remaining shares on the same terms unless the acquisition is unfair.
The bidder can then acquire the remaining shares on the same takeover bid terms if they meet two thresholds: 1. at the end of the takeover bid, the bidder has an interest in at least 90% shares; and 2. the bidder has already acquired 75% of the shares that the bidder made offers for under the bid.
The bidder can only compulsorily acquire shares in the same bid class to which the takeover bid applied. Therefore, if the takeover bid was for ordinary shares, the bidder can only acquire ordinary shares. The bidder must also be able to show that they hold 90% of shares in that particular bid class.Where a bidder does not meet the thresholds, they may undertake a compulsory acquisition of shares, but only with the approval of the court. A court will permit this if shareholders in the company are unidentifiable or uncontactable, or if the bidder has an interest just below the 90% threshold.
All the above in my opinion and not investment advice.
Do your own research.
SGH Price at posting:
54.5¢ Sentiment: Hold Disclosure: Held
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