This time I’m going to share an article by our friend Pau from Company Blog It’s well worth a read – have a go and enjoy:
No, I’m not going to start singing. I’m really rubbish at it, and besides, I was never really keen on Koala. What I’m going to try to do is explain what a takeover bid is and why the news programmes went on and on about it day after day.
A takeover bid is, quite simply, a Takeover Bid. I know I haven’t made a bloody bit of sense of this, but we’ll get there bit by bit. You’ll understand it like a dream with an example.
“The company Jóvenes Rumanas SA is listed on the stock exchange and has 100 shares. The village priest has decided to take control of the brothel, as he is not pleased that the young women working there refuse to attend to him because of his position as a clergyman. The shares are held by the 100 villagers, one each, and the parish priest will have to launch a takeover bid to gain control of the shares. To avoid inequality – and to prevent some shareholders from being offered more money than others, thereby disadvantaging the other shareholders – the law stipulates that the priest must offer to buy all the shares from each and every shareholder, and must do so by offering the same amount for each share.
However, the parish priest does not need to buy them all. He will only need the 25% to secure a significant stake, and the 50% to secure a majority stake. In either case, for legal purposes, he will be required to launch a takeover bid.
If the takeover bid has the approval of senior management, in this case the Romanians themselves, who must have approved it, is called friendly, but if, on the other hand, it is done without consent of the sluts, it is considered hostile.”
Broadly speaking, this amounts to a takeover bid. Perhaps you will now understand the significance of the matter. Compare this case with what happened with Endesa.
Gas Natural wanted to take over Spain’s largest electricity company, and launched a hostile takeover bid which the government approved. The German company Eon, which was also interested, reached an agreement with Endesa and launched a friendly takeover bid, offering more money per share and guaranteeing investment and the safeguarding of jobs. In my view, Eon did what it had to do and complied with the law. But the government was not keen on Spain’s largest electricity company falling into the hands of the Germans, who are very efficient and might make us look bad, so it kept raising objections until Gas Natural and the Italian firm Enel joined forces and matched Eon’s bid. They should have outbid it, but the government said that was fine, and that they preferred to give half to the Italians rather than the whole lot to the efficient Germans.
There’s no need for me to say that what ZP did was very wrong, and that it went against free competition, even if it was in the country’s best interests. It’s only to be expected that the EU then gave him a good kicking. The result is that we’re now on pretty poor terms with Germany, and Angela Merkel wants to convince Nicolas Sarkozy not to give us a hard time. That’s a bad thing, as Sarkozy is also a mate of Rajoy’s. All in all, we’re on rather poor terms with Germany and France, who are the economic powerhouse of Europe. But in Italy, that mafioso Berlusconi might invite ZP round for a game of poker and teach him how to fix matches.
Incidentally, in the end the priest managed to take control of Jóvenes Rumanas SA, but the female workers decided to leave the company and accept the offer from the pastor of the neighbouring village to set up Rumanas Reunidas SLL. In the end, the priest had to carry on running the show on his own, and to top it all, the parishioners have taken a dislike to him.