Suppose that Bose Corporation, which is a privately owned corporation in Boston, buys out a small publicly traded company, called ABC Inc., with $50M in revenues. The market cap of ABC is $75M, and Bose bought out 50% of the shares, let's say for this example.
Does this transaction improve the hell out of ABC's balance or income sheet? Now, their equity is MUCH higher since it's now amalgamated/comingled with that of the parent company, i.e. Bose Corporation.
If Bose bought 100% of the shares, then would ABC still be considered public when all the shares are owned by one entity?
Would the share price of ABC be a reflection of investor's perception of Bose?
Would Bose purchase out a company like this simply for access to capital markets and to raise money very quickly without the headaches of going public? Another words, instead of IPO'ing with all its costs, they can purchase a small public company and issue shares just the same.
Many jurisdictions require that an operation that owns more than much less than 50% make a takeover offer for the rest too.
Nope. It makes no difference to that if thats all that happens.
In practice no operation just buys 50% of another operation and doesnt plan to do anything more than that unless its a pure investment operation and even then, they dont normally buy 50% unless they want to have control and that why they own half of the stock.
That doesnt happen with just 50% of the stock.
That isnt usually possible. You cant ever get all of the shares just buy buying them on the market, there will usually be some stockholders that arent even aware that you want to buy the lot, so they wont be selling them on the market.
You can make a takeover offer, and in most jurisdictions, if you get over a specified percentage of the stock holders happy to sell you their stock as a result of the takeover offer, you can normally compulsorily aquire the rest for the same price as was offered in the takeover offer.
No it wouldn not. It would be delisted as a result of the takeover offer.
If they just buy what they can get on the market and then deliberately make an unattractiv e takeover offer for the rest because legally required to do that, and because its an unattractive offer, no one else takes up the offer, THEN it would remain a publicly listed stock that just happens to have the bulk of the stock owned by one major shareholder.
Nope, it mostly reflects what is expected takeover offer wise by Bose, and from others if there is an expectation that some other operation other than Bose might consider a counter takeover offer for ABC.
If it becomes clear that Bose isnt going to make a takeover offer that might see enough of the ABC shareholders accept that offer so the rest can be compulsorily aquired because enough did accept the Bose offer, the price of the ABC stock would normally fall when that becomes clear.
Essentially Bose sets the price of the ABC stock in that situation.
In fact nothing like that would happen. Bose would need access to capital markets to raise the $100M or close it would require to acquire 100% of ABC and just wanting to take over ABC wouldnt neccessarily raise money very quickly and it would have to be spent on aquiring ABC anyway if they did.
This is how I may react to news items, buyouts, mergers, rumors, unusual market activity
sometimes I try to go to the newspaper(s) in the city of a company, run a search
Because the local media tend to do a story in non legalistic, non- esoteric words
Of course the writer(s) can get a story with wrong emphasis about complex financial nuanced situation, while a mass media story by itself has at least some dynamic impact, whether or not if it's exactly true
As a minor stockholder w/o contact in the company(ies) involved, ... make a guess and beat up self when guessing wrong
of course depending upon amount or value of shares, go to the town and snoop, pick up gossip at a dinner or motel, see if there is action at the loading dock, visit chamber of commerce, and hang around bank and spend rest of day being questioned by police
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