Hostile Takeover and Ethics

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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.…show more content…
What this means in practice is that changes should be, if at all possible, done gradually so that affected workers have time to train for and secure other employment. While voluntary takeovers present few ethical issues hostile takeovers are a different matter. With companies finding few willing partners pressure tactics are often exerted on unwilling targets. Oracle’s US$ 10.5 hostile takeover bid for Peoplesoft or Barrick Gold Corp.'s US $10.4-billion ultimately successful bid for Placer Dome Inc., is just the latest example. Any form of pressure tactics and coercion on others, whether done personally, through others or even through the media, is unethical. It will be unethical even if the price paid is above market value, by overvaluing an entity. While unethical, such tactics do not label one an evil person whose testimony would not be accepted in a court of law. Presumably the willingness to pay for the object of desire demonstrates some form of honesty. In addition continued pressure to sell would cause needless mental anguish to others. At times pressure tactics would be forbidden even in the context of a willing buyer and seller. In certain transactions it is self understood that bargaining is part of the sales process and thus there would be no problem putting in a lower bid than the asking price. However once an offer is rejected attempts to try and convince the party to accept the

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