takeover

noun take·over \ ˈtāk-ˌō-vər \
Updated on: 13 Oct 2017

Definition of takeover

:the action or an act of taking over

Examples of takeover in a Sentence

  1. The government experienced a military takeover in 2002.

  2. the new government's high-handed takeover of private industries

Recent Examples of takeover from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'takeover.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of takeover

1910


take over

verb

Definition of take over

transitive verb
:to assume control or possession of or responsibility for
  • military leaders took over the government
intransitive verb
1 :to assume control or possession
2 :to become dominant

Examples of take over in a Sentence

  1. I'll take over for her until she gets back from her morning break.

  2. took over the responsibility of caring for the animals

First Known Use of take over

1618


Financial Definition of TAKEOVER

takeover

What It Is

A takeover is the purchase of a company. A takeover is different from a merger, which occurs when the purchaser and the target both cease to exist and instead form a new, combined company.

How It Works

Let's assume Company XYZ wants to acquire Company ABC. Company XYZ might just start buying ABC shares on the open market, but once Company XYZ acquires 5% of ABC, it must formally (and publicly) declare how many shares it owns to the Securities and Exchange Commission. Company XYZ must also state whether it intends to create an ABC takeover or just hold its existing shares as an investment.

If Company XYZ indeed wants to proceed with the takeover, it will make a tender offer to ABC's board of directors (followed by an announcement to the press). The tender offer will indicate, among other things, how much Company XYZ is willing to pay for ABC and how long ABC shareholders have to accept the offer.

The most common methods of determining the target's value are to look at comparable companies in the industry and to conduct a discounted cash flow analysis, but evaluating other measures such as P/E ratios, price-to-sales ratios, or even replacement costs provides valuable insight. Acquirers often have to pay a premium above the market price of the target company's shares in order to get the shareholders to agree to the takeover.

Once the tender offer is made, ABC can accept the terms of the offer, negotiate a different price, use a "poison pill" or other defense to avert the deal, or find somebody else to sell to who will pay as much or more as XYZ is offering. If ABC accepts the offer, regulatory bodies then review the transaction to ensure the combination does not create a monopoly or other anticompetitive circumstances within the industries involved. If the regulatory bodies approve the transaction, the parties exchange funds and the deal is closed.

Companies often conduct takeovers with cash, but they also use debt and their own stock as well, and there are often tax consequences associated with each form of currency.

Why It Matters

Takeovers can create a bigger, more competitive, more cost-efficient entities. This synergy -- that is, the idea that the two companies together are more valuable to the shareholders than they are apart -- is elusive, but it is what justifies most takeovers. After all, acquirers always have the much harder option of trying to "grow their own" by starting their own competitive ventures instead of buying someone else's. Targets often succumb to takeovers because at the end of the day, the price is right. And on both sides, a well-executed takeover can be the crowning jewel of a CEO's career.



TAKEOVER Defined for English Language Learners

takeover

noun

Definition of takeover for English Language Learners

  • : an occurrence in which a person, company, etc., takes control of something


Law Dictionary

takeover

noun take·over \ ˈtāk-ˌō-vər \

legal Definition of takeover

:the acquisition of control or possession (as of a corporation)
  • a hostile takeover


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