When one company approaches another company, making an offer to the latter's shareholders, seeking to acquire their shares in sufficient quantities to take control. If the company that is being taken over is listed on the Stock Exchange, a strict protocol of rules and regulations exist to protect the interests of shareholders. A time limit is set for acceptance of the offer. If the company making the offer gets control of 90% or more of the shares, it has a legal right to acquire the remaining 10% of the shares at the offer price.
A take-over bid may be friendly, recommended by the board of the company being taken over, or it may be hostile, rejected by the board with the company making the offer going direct to shareholders.
