1. How does a buyer acquire control of a public company?
The two most common methods of acquiring control of a public company are: (i) a two-step take-over bid, and (ii) a court approved plan of arrangement, with the vast majority of acquisitions being done by way of a plan of arrangement.
• Take-over bid. A formal offer is made to all shareholders, which is open for acceptance (or tenders of shares) by the target’s shareholders. A take-over bid can be friendly or hostile. Shares not tendered to a take-over bid can generally be acquired in a second-step transaction if at least 66 2/3% of the shares are tendered to the bid.
• Plan of arrangement. A statutory plan of arrangement that requires both shareholder and court approval and, if successful, results in the acquisition of 100% of the target in a single step. As these transactions require the cooperation of the target, they are almost always negotiated. A plan of arrangement may provide for almost any type of transaction or combination of transactions, including:
◊ share purchases;
◊ redemptions of shares;
◊ transfers of assets; and/or
◊ issues of new shares.