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Takeovers; 90% stake vs 50% stake. What are the benefits?
As laws change from country to country I am interested in this in an Australian context.
There has been a lot of takeover activity in the market lately.
To gain control of a company you need a stake of greater than 50%. My understanding is that with this stake you can control the company.
However, to change it from a public company to a private company you need to acquire all of the companies shares. If you can get more than 90% of the shares then you can apply to compulsarily acquire the rest of the outstanding shares. So someone with a 10% holding in a company is said to have a blocking share holding.
Takeovers often fail if a company/person can't get a 90% stake.
Why is this? I am confused as a 50% stake will give the takeover company control. What is the benefit of a shareholder to hold onto a 10% stake given that they have no control over the their investment?
2 Answers
- SGEliteLv 71 decade agoFavourite answer
One can have control over the company with 51% shares ownership. For those holding less percentage shares, they are considered as minority shareholders. They may not have full control over the company but I like to believe that they parked themself there to gain dividends. As for converting a public listed company to a private company, the percentage shares ownership for compulsory takeover differs from countries to countries.
- Brad LLv 41 decade ago
Having control of the company is different than having the power to make the transition from public to private. Think if it as analogous to the votes required to pass a law versus the votes required to pass a constitutional amendment.