Company takeovers may be accomplished with cooperation and acceptance or negativity and a fight. If both of the companies agree to the takeover, it is called a friendly takeover. In a friendly takeover, company A, for example, wants to acquire company B. If company B’s board agrees to the terms of the takeover, it is referred to as a friendly takeover. If company B’s board rejects the offer, however, company A may proceed anyway in what is referred to as a hostile takeover.
It is easy to imagine that a company takeover is always negative. This type of situation, however, may be viewed as positive in many cases. For example, a company may be presented with a merger offer that is for the good of the company and beneficial for those involved. In such a case, the company’s board of directors may be happy to accept the offer and put it to shareholder vote.
When a board of directors approves of a takeover, it is likely that the company's shareholders will vote in favor of the friendly takeover as well. The enthusiasm with which an offer is received, however, often depends on the amount of the buyout offer. Lower buyout offers may be met with more resistance.
Many takeovers are considered friendly, but situations can also turn hostile. This typically happens when the company’s board of directors doesn’t approve of the offer or its shareholders vote against it. For example, a company’s board of directors may believe that an offer is too low or that an acquisition will be negative for the company and those involved. When a takeover offer is rejected, the acquiring company may force the takeover by purchasing enough of the other company's stock to gain control of the company, without the board’s agreement or approval.
It is worth noting that a rejected takeover offer may not always lead to a hostile takeover. Sometimes the two companies engage in negotiations until they come up with a deal upon which they can agree. In other cases, the acquiring company may only wish to acquire the company on friendly terms, so it may move on when its offer is rejected. In fact, some companies that do decide to proceed with a hostile takeover fail to obtain control of the other company. For example, the acquiring company may fail to purchase the amount of stock needed for the hostile takeover.
