Acquisition

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Dictionary Says

Definition of 'Acquisition'

A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both.
Investopedia Says

Investopedia explains 'Acquisition'

Acquisitions can be either friendly or hostile. Friendly acquisitions occur when the target firm expresses its agreement to be acquired, whereas hostile acquisitions don't have the same agreement from the target firm and the acquiring firm needs to actively purchase large stakes of the target company in order to have a majority stake.

In either case, the acquiring company often offers a premium on the market price of the target company's shares in order to entice shareholders to sell. For example, News Corp.'s bid to acquire Dow Jones was equal to a 65% premium over the stock's market price.

Related Definitions

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    Acquisition Fee

    Charges and commissions paid out for the selection or purchase of property. Some examples include real estate commission, acquisition expense and development/construction fees.
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  • Acquisition Premium

    The difference between the actual cost for acquiring a target firm versus the estimate made of its value before the acquisition.
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  • Hostile Takeover

    The acquisition of one company (called the target company) by another (called the acquirer) that is accomplished not by coming to an agreement with the target company's management, but ...
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    • Friendly Takeover

      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 ...
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    • Saturday Night Special

      An obsolete takeover strategy where one company attempted a takeover of another company by making a sudden public tender offer, usually over the weekend. This merger and acquisition ...
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    • Buy, Strip And Flip

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    • Cash Hoard

      A large amount of available money held by a company in anticipation of facilitating future projects or meeting future financial obligations. A cash hoard held by a company often makes ...
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    • All Cash, All Stock Offer

      A proposal by one company to purchase all of another company's outstanding shares from its shareholders for cash. An all cash, all stock offer is one method by which an acquisition can ...
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    • Mini-Tender

      A type of third-party offer made to a company's shareholders as an attempt to purchase the underlying shares. Unlike conventional tenders, mini-tenders usually involve less than 5% of a ...
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    • Contingent Value Rights - CVR

      A type of right given to shareholders of an acquired company (or a company facing major restructuring) that ensures they receive additional benefit if a specified event occurs. A ...
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