What is a friendly takeover, do the shareholders of acquired firm get benefit from such takeover?

A "friendly takeover," also called an "acquisition," occurs when the acquiring company informs the target company's board of directors that it plans to purchase a controlling interest.

The board of directors then votes on the proposed buyout.

If the board believes the stock purchase would benefit the current stockholders, they vote in favor of the sale.

The acquiring company then takes control of the target company's operations and may or may not choose to keep the target company's board of directors in place

A situation in which a target company's management and board of directors agree to a merger or acquisition by another company. In a friendly takeover, a public offer of stock or cash is made by the acquiring firm, and the board of the target firm will publicly approve the buyout terms, which may yet be subject to shareholder or regulatory approval. This stands in contrast to a hostile takeover, where the company being acquired does not approve of the buyout and fights against the acquisition.

n most cases, if the board approves a buyout offer from an acquiring firm, the shareholders will vote to pass it as well. The key determinant in whether the buyout will occur is the price per share being offered. The acquiring company will offer a premium to the current market price, but the size of this premium (given the company's growth prospects) will determine the overall support for the buyout within the target company.

 Board feels that accepting the offer serves the shareholders better than rejecting it, it recommends the offer be accepted by the shareholders

Friendly takeovers

A "friendly takeover" is an acquisition which is approved by the management. Before a bidder makes an offer for another company, it usually first informs the company's board of directors. In an ideal world, if the board feels that accepting the offer serves the shareholders better than rejecting it, it recommends the offer be accepted by the shareholder