Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Evaluating the Shareholders Wealth Consequences in Defeating Hostile Takeovers of UK Companies - Essay Example

Comments (0) Cite this document
One of the most threatening crises that could strike an organisation or a firm is a hostile takeover attempt. This occurs when one company wants to acquire a competitor or a firm that will add new markets or products. Often the acquiring has neither the intention nor the capability of operating the company…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER99% of users find it useful
Evaluating the Shareholders Wealth Consequences in Defeating Hostile Takeovers of UK Companies
Read TextPreview

Extract of sample "Evaluating the Shareholders Wealth Consequences in Defeating Hostile Takeovers of UK Companies"

Download file to see previous pages Changes in the structure and organisation of a company's operations may be reflected in performance data, but these data provide little indication of the nature and extent of the structural changes. Changes in the functions performed within the company, the product mix, the availability of finance, input sources, industrial relations and many more qualitative aspects of the company's operations may also have significance for the long-run development of the acquired company which would not be reflected in relatively short-run performance data (Ashcroft & Love, 1993, p. 39).
An example of a company's effort to substantiate changes through a hostile takeover is that of Olivetti. This Italian industrial giant was long known as a typewriter and office machine company, which almost failed in the 1980s. With the entry of several US competitors in the late 1980s, Olivetti found itself in hot water as it is being toppled down by IBM, Dell, Toshiba, and Compaq. The solution was not obvious, though one business that Olivetti entered in the 1980s, telecommunications, has turned out to be the one in which the company is trying to bet its future. With the bold bid for Telecom Italia in 1998, Olivetti launched one of the first major hostile takeover bids in Europe. After successfully overcoming the strong opposition of Telecom Italia's board and an attempt to recruit Deutsche Telekom as a white knight, Olivetti did take control of the telecommunications company. Now it remains to be seen if Olivetti really can remake itself as a leading telecommunications company moving into the twenty-first century (Raghavan and Naik, 1999).
In occasions of hostile takeovers, the final decision of whether to allow it rests with the stockholders. In an earlier time, they were largely individuals whose purpose in investing was to earn dividends and hope the stock would appreciate in value so they could sell it at a gain for their retirement. Such "little investors" in our era have been replaced by giant investment funds managed by shrewd professionals with sophisticated computer programs to guide their decisions. They work for mutual funds, pension funds, and other large-volume investors with billions of dollars that they must "keep working" for the benefit of their shareholders or members (Loughran & Vigh, 1997).
As there are already strong takeover defences presently available to corporations, shareholders do not have claim to decide whether or not proposed takeover offers are in the best interests of the company. Unfortunately, managerial decision-making may become conflicted for any number of reasons when the company becomes a target for takeover. The burden of proof to show there's no conflict of interest is clearly on the shoulders of the management of the target company. Fact is that any expenditure to "defend" the company from a hostile takeover need to be ultimately justified by enhanced shareholder value. Apparently, during takeovers, the management represents the company, regardless of whether or not it would be more beneficial if shareholders accepted a takeover offer and reinvested the offer value (Neis, 1997). It could also happen that management could overestimate its own ability to create value for shareholders and mistakenly turn down superior offers. Another dilemma that deserves more careful review is that management owning a substantial number of ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Evaluating the Shareholders Wealth Consequences in Defeating Hostile Essay”, n.d.)
Evaluating the Shareholders Wealth Consequences in Defeating Hostile Essay. Retrieved from
(Evaluating the Shareholders Wealth Consequences in Defeating Hostile Essay)
Evaluating the Shareholders Wealth Consequences in Defeating Hostile Essay.
“Evaluating the Shareholders Wealth Consequences in Defeating Hostile Essay”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Evaluating the Shareholders Wealth Consequences in Defeating Hostile Takeovers of UK Companies

Does the corporate governance maximize shareholders wealth

... hierarchical structure with an emphasis on loyalty to the organisation and obedience to superiors. The classical approach to organisational effectiveness was mainly from a managerial viewpoint. Further, classical organisational effectiveness postulated that hard and efficient labour would ultimately reap rewards for management and employees, by increasing the performance outcomes of the organisation. Thus, by raising the productivity, higher profits would be accrued, which in turn would give rise to higher pay, and consequently improved worker satisfaction (Etzioni, 1964). Today’s concepts of effective organisations and management are related to past perspectives (Baker and Branch, 2002). The contemporary globalisation of business...
8 Pages(2000 words)Essay

Private Security Companies of Hostile Countries

Though overall security responsibility of people is taken up by occupying forces, the militants target the private and government organisations that help in development of infrastructure and organisations that help in economic development. Thus they try to distort the development activities that help in rebuilding the country. The important objectives of the expatriate security companies are to offer training for local police and to give security for private and governmental organisations as the police and military forces in Iraq are not in adequate number to protect them. Even the international organisations like UN offices that are helping in rebuilding of Iraq, voluntary organisations and MNC companies need security from the m...
32 Pages(8000 words)Coursework


... Introduction Active takeovers market is a statute employed by many firms to virtually ensure maximum profitability. It’s an incentive undertaken to maximize on the profit gain at the same time ensuring a proper firm economic value. However, there is need to acknowledge the underlying turmoil that cocoons itself as regulatory frameworks that govern firm operations and economic matters. They are as follows: Enlargement of the Union This is in face value a really potential market booster, but under deep and critical thinking you will recognize that it hampers the main foundation of active takeover market-profitability. It is detrimental to largely expand a firm /union since the unit profit chip in is considerably low and hence the entire...
1 Pages(250 words)Essay

Defense strategies against hostile takeovers

Dismissal of the existing employees would mean that the acquiring company will have to pay hefty benefits as send-off packages to the dismissed employees (Harris, 1990). This makes acquisition expensive for potential acquirers, making them to think twice about their acquisition intentions.
The Golden Parachute is effective to the extent that it benefits stakeholders and enables a company to prevent any hostile takeover (Harris, 1990). Golden Parachutes make it easier for stockholders to hire and retain managers in industries that are prone to mergers and acquisition. The defense mechanism also helps the executive to remain objective about the company during a takeover process. Furthermore, it increases the cost of a takeover;...
11 Pages(2750 words)Thesis

Marketing Communictions Strategies of the Col Drinks in the UK

Unfortunаtely for smаll soft drink compаnies such аs the Double- Colа Co., the prize of less thаn one percent mаrket shаre is won only by fighting а dаily bаttle for survivаl, especiаlly аgаinst industry giаnts Cocа- Colа аnd Pepsi- Colа.

The following investigаtion is а cаse study of the successes аnd fаilures of one smаll compаny in the soft drink wаrs. It is а testаment to the meаning of brаnds аnd the lengths thаt loyаl consumers go to keep Double- Colа аs their fаvorite beverаge. Аnd it is аn evаluаtion of how аdequаtely the current regulаtory environment serves the needs of these consumers аs well аs Double-Colаs owners аnd bottlers. It аddresses criticisms thаt the regulаtory environment permits аn uneven plаying...
19 Pages(4750 words)Case Study

Management of the UK Music Industry

Online market demand is dominated by teenagers who have shifted their purchases from singles CDs to mostly illegal downloads of singles tracks, stimulated by continually evolving software and P2P networks. In order to survive, market players have to reconsider their strategies and value propositions – by mergers of music labels; flexible pricing and value-added offers by online distributors and active ethical campaigns, the challenge before these companies is to convert the internet medium from a threat to copyrighted material into an effective distribution channel.
Rivalry among competing sellers in the industry – rivalry among legal internet music sites is not too intensive, because the legal online download ind...
15 Pages(3750 words)Case Study

The Trade Union Movement in the UK

Before the ERA 1999, union membership and recognition in the UK were characterized by voluntarism, in which employers and employees could bargain over the terms and conditions of employment without any legal interference. With the statutory system ushered in by the new law, voluntary recognition of unions is no longer allowed and it becomes unlawful for British employers to deny recognition to unions under any circumstances. That conveys the impression that ERA created a radical change in British industrial relations. This paper takes the contrary view, however, and proposes that while the new industrial relations law looks revolutionary in principle, there are no fundamental changes in actuality for the change to qualify as &ldqu...
8 Pages(2000 words)Case Study

Shareholders Wealth Maximization

In this write up an effort is made to analyze factors that matter in affecting the after-tax profitability of an entity in its pursuit to maximizing shareholders’ wealth.
The objectives of financial management are many and profit maximization on way to shareholders’ wealth maximization is one of those objectives, but this object is certainly the most important of all objects. Profits are required by companies to cover the costs of operation and on to earn profits. In to pursue the enhancement of profitability, the financial management of the corporation develops certain other important objectives like the arrangement of financial resources, effective utilization of procured finances in the shape of investments and...
6 Pages(1500 words)Case Study

Credit Crunch in the UK

To sell more profitable subprime mortgages, mortgage companies bundled the debt into consolidation packages and sold the debt on to other finance companies. In other words, mortgage companies borrowed to be able to lend mortgages. For example, the lending was not financed out of saving accounts (Mortgage Guide).

These mortgage debts were bought by financial intermediaries. The idea was to spread the risk, but, actually, it just spread the problem. Usually, subprime mortgages would have a high-risk assessment rating. But, when the mortgage bundles got passed onto other lenders, rating agencies gave these risky subprime mortgages a low risk rating. Therefore, the financial system denied the extent of risk in their balance...
8 Pages(2000 words)Case Study

UK Employment Policy

Analysts explain that this situation is not simply because citizens don’t want to exercise this fundamental right, but largely because of the continued failure of the governments to institute an effective implementation of employment policies put in place (Howell, 2005). It has clearly been demonstrated by Mathew (2006) that the United Kingdom government has shown a lot of unwillingness in tackling the reported unemployment crisis.

Available research findings reveal that there are high unemployment rates among UK born ethnic minorities which show great diversities. According to a 2001 report, it is shown that unemployment rates amongst UK born men and women from black, Bangladeshi and Pakistani ethnic groups were...
9 Pages(2250 words)Case Study

Contrast of Two Explanations of Social Disorder in Contemporary UK Society

As the process of urbanization takes off and more people start residing in major cities, the fissures start to appear within the apparent harmonious co-existence. There are several reasons why disorderly conduct on part of individuals and groups takes place. Sociologists have proposed numerous theories explaining this phenomenon.

Erving Goffman was an astute observer of society, who immersed himself in the social environment which he was studying. He carefully observed and recorded the ways in which people’s behavior and interpersonal interactions are carried out in everyday life. He notes that “people perform their social roles and, as they do so, they produce social order through their actions and the regu...
6 Pages(1500 words)Article

Validating Late Mover Advantages in e-commerce: Evidence from Selected Companies

... will be estimated by calculating their return on investment (ROI). The research will conduct its investigation by using examples of companies namely Barnes and Noble, and Walgreens from the industry and evaluate their businesses for validating advantages of late movers in e-commerce. Research Hypothesis The proposed research will investigate information from different sources to accept or reject the following hypotheses set out as a basis of research. H0: Late Movers in e-commerce do achieve competitive advantage and high shareholders’ value through dedicated e-commerce approach. H1: Late Movers in e-commerce do not achieve competitive advantage in comparison to First Movers in e-commerce. Research Questions The proposed research...
12 Pages(3000 words)Research Proposal

The Key Macro Factors that Have Influenced the UK Grocery Retailing Industry since the Early 1960s

Johnson et al highlight that external macro-economic factors intrinsically impact strategy management and without accounting for macroeconomic factors in strategy development and management, a business will fail (Johnson et al, 2008, p.3). If we consider this contextually with regard to the UK grocery market; the move demise of the local high street store to the dominance of supermarkets in the past 20 years has radically transformed the grocery market ( Henry, 2008, p.77). For example, the DEFRA Economic Note on UK Grocery Retailing (2006) indicates that in addition to continued growth in the UK Grocery Retail sector; approximately “3/4 sales are made in supermarkets and superstores… with traditional small retailers...
13 Pages(3250 words)Assignment

Evaluating the Nature Of Co-Ownership of Property and Trust Relationship

Technically, the rule on implied sharing in the property emanates from the assumption that the people involved in the transaction are partners. The rights of the parties in an implied partnership and sharing of the property need to be defined to determine the just share of the parties. According to Lord Bridge in the case of Lloyds Bank v Rosset1, to determine the sharing of the property, there is a need to establish the kind of agreement that the parties have over their affair. To do this, the court said in the case of Lloyds Bank v Rosset that we must look into the conduct of the parties when it comes to “sharing the house as their home and managing their joint affairs”2.

According to Lord Bridge in the ca...
6 Pages(1500 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Evaluating the Shareholders Wealth Consequences in Defeating Hostile Takeovers of UK Companies for FREE!

Contact Us