Mandatory Offer??

MKT · 1 Mandatory Offer?? Fri Aug 26, 2011 9:47 am

MKT

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What is 'Mandatory offer'??

hariesha · 2 Re: Mandatory Offer?? Fri Aug 26, 2011 10:40 am

hariesha

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When you acquired 30% of a certain company, you have to make an offer to other shareholders to sell their shares to you, if they are willing to sell. Price would be the highest price you or any related party paid for the particular share during last 3 months. Mandatory means, the party who acquired, is mandatory to make an offer and buy other shareholders shares, according to take overs and merges code. But it's not mandatory to other shareholders to sell at that price. If they are willing to keep the shares or if the market price is higher than the offer price, other shareholders can ignore the offer.

stockanalytic · 3 Re: Mandatory Offer?? Fri Aug 26, 2011 11:16 am

stockanalytic

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MKT wrote:What is 'Mandatory offer'??

The City Code (of the Takeover Panel) requires that if a shareholder or a concert party acquires more than 30% of a company it must offer to buy the remaining shares on terms as good as its most recent purchases.

The reason for this is that 30%, although not giving a shareholder formal control, is sufficient to give effective control.

When a change of control takes place it may adversely affect the share price. This is because minority shareholders are likely to worry that the company will be run to suit the controlling shareholder, and the interests of minorities may be affected. Therefore, it is only fair to allow them to sell out at the price that the new controlling shareholder paid before the change of control.

There are circumstances in which the Takeover Panel may grant a waiver from the requirement to make a mandatory offer — for example, if major shareholders state that they will not accept the mandatory offer.
http://moneyterms.co.uk/mandatory-offer/

MKT · 4 Re: Mandatory Offer?? Fri Aug 26, 2011 11:34 am

MKT

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Thanks a lot hariesha & stockanalytic..i was searching about this relevant to OGL mandatory Offer and it says OFFER PRICE PER SHARE= Rs 28/= actually that is bit confused appreciate if anybody can explain this? Thanx