Takeunder

AAA

DEFINITION of 'Takeunder'

An offer to purchase or acquire a public company at a price per share that is less than its current market price. A takeunder is almost always unsolicited and generally occurs when the target company is in severe financial distress or has some other major problem that threatens its long-term viability, as a going concern. A takeunder is similar to a takeover in most respects, except for price, since a conventional takeover target would usually receive a premium to its market price from a potential bidder.

INVESTOPEDIA EXPLAINS 'Takeunder'

For example, a company that receives an offer to be acquired at $20 per share when its shares are trading at $22 would be considered to be the subject of a takeunder offer. Note that in a takeunder situation, the offer is unlikely to be at a very large discount to the current market price, since the target company's shareholders would be quite unlikely to tender their shares if the offer is substantially below the current market price. As well, existing shareholders can sell their shares at the (higher) market price, rather than the takeunder price.


The target company may reject a takeunder attempt outright as a low-ball offer, but it may give the offer due consideration if it is faced with insurmountable challenges. This may include dire financial straits, steep erosion in market share, legal challenges and so on. In such cases, if the company believes that its chances of survival are much better if it is acquired rather than continuing as a stand-alone entity, it may recommend to its shareholders to accept the takeunder offer.

RELATED TERMS
  1. Takeover

    A corporate action where an acquiring company makes a bid for ...
  2. Predator

    In mergers and acquisitions, a company with sufficient financial ...
  3. Acquisition Premium

    The difference between the estimated real value of a company ...
  4. Target Firm

    A company which is the subject of a merger or acquisition attempt. ...
  5. Merger Deficit

    An accounting term used to describe the situation when the total ...
  6. Registered Holder

    Shareholders who hold their shares directly with a company.
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. The Merger - What To Do When Companies ...
    Investing Basics

    The Merger - What To Do When Companies ...

  3. Mergers & Acquisitions: An Avenue For ...
    Forex Education

    Mergers & Acquisitions: An Avenue For ...

  4. Mergers Put Money In Shareholders' Pockets
    Investing

    Mergers Put Money In Shareholders' Pockets

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center