What is the difference between an acquisition and a takeover?

By Joseph Nguyen AAA
A:

There is no tangible difference between an acquisition and a takeover; both words can be used interchangeably - the only difference is that each word carries a slightly different connotation. Typically, takeover is used to reference a hostile takeover where the company being acquired is resisting. In contrast, acquisition is frequently used to describe more friendly acquisitions, or used in conjunction with the word merger, where both companies are willing to join together.

An acquisition or takeover occurs when one company purchases another. Companies perform acquisitions for various reasons: they may be seeking to achieve economies of scale, greater market share, increased synergy, cost reductions or for many other reasons. The acquiring company would usually proceed with the corporate action by offering to purchase the shares from the shareholders of the target company. Often, a cash offer is made but sometimes the acquiring company may offer to trade its own shares in exchange for the target company's shares. Also, the difference between mergers and takeovers/acquisitions are that mergers involve two companies of roughly equal size that have decided to combine together to take advantage of expected advantages of a being larger company. (Learn more about mergers in our article, The Wonderful World Of Mergers.)

This question was answered by Joseph Nguyen

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