Tender offers, corporate control and governance challenges

Mergers & Acquisitions along with buyouts and takeovers on one hand helps a company develop competitive advantage and increase their shareholder value while on other hand they present several challenges like they destroy industries & increase unemployment. For instance a takeover may harm the personal interests of displaced or disguised employees and also involves breach of trust in transferring wealth to shareholders by isolating implicit contracts with other stakeholders. Such takeovers also involve ignorance of employee security. So every company envisaging a Strategic Move to take over or acquire has to put in place the Take Over Code and adhere to the time plan.

The strategic move by companies to have corporate control is predominantly by two methods- have a proxy fight or use tender offers to consolidate ownership and govern the company diligently with more decisive strength. This research paper brings out the various researches around the world in different markets bringing out the needs for TOs, their inherent advantages and the situations that warrant their effective use. Few corporate examples describing the optimal fit to use are also cited to understand the ‘Cause and Effect ‘of each TO exercise. Taxation impact of TO is dependent on many factors including domicile and tax status of the shareholder who tenders its shares. Besides that there will be Double Taxation Treaties in place between several countries during Cross Border deals. Through the tender offers, the hostile, friendly and smooth joint ventures take place and market development and competitive supremacy is being established.