Hostile Takeover and Ethics Essay

6755 Words Nov 1st, 2008 28 Pages
Executive Summary

When one company (called the acquirer or bidder) acquires another company (called the target), then it is called takeover. Takeover can be of two types: Friendly Takeover and Hostile Takeover.

In Friendly Takeover, the bidder informs the target of their takeover plans. If the target feels that the takeover will help its shareholders, then it generally accepts the takeover offer.

A Hostile Takeover is an acquisition in which the company being purchased doesn't want to be purchased, or doesn't want to be purchased by the particular buyer that is making a bid. Members of management might want to avoid acquisition because they are often replaced in the aftermath of a buyout. They are simply protecting their jobs.
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Sometimes it is the shareholders of the target company who help in the hostile takeover by selling their shares to the target company for personal gain.

This project will explore whether hostile takeover is unethical; and the different unethical practices involved in a hostile takeover. The main sector on which this project will focus is the Information Technology sector. Background

Mergers and Acquisitions have become the rule of the day for corporate growth. With many large corporations awash in cash and the slow nature of internal growth, many companies are on the lookout for takeover targets. This also sometimes serves as the barometer of general economic conditions. Throughout the globe, mergers and acquisitions have increased. In Canada, it jumped 47 percent to a near-record $166 billion in 2006 amid “ideal market conditions.” In India it jumped by almost 80 percent in the last two years. Despite the massive job cuts that ensues such activity, corporate claims there is nothing inherently improper about such activity. “The increased efficiencies that are often generated are beneficial to economic growth over the long term and thus society is the better for this,” is what they reason out.

Care should be taken to ensure that those individuals affected are treated fairly and equitably as they are

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