What is ‘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.

Explaining ‘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.

Further Reading

  • Financial crisis's influence on China export enterprise and countermeasure research [J] – en.cnki.com.cn [PDF]
  • The effects of inflation targeting strategy on the growing performance of developed and developing countries: Evaluation of pre and post stages of global financial … – www.sciencedirect.com [PDF]
  • Analyzing the impact of petroleum fiscal arrangements and contract terms on petroleum E&P economics and the host government take – www.onepetro.org [PDF]
  • Pragmatic Joint Venture Financing Options in Nigeria: Implications on Economic Metrics and Government Take Statistics – www.onepetro.org [PDF]
  • The Impact of Foreign Bank Entry on Chinese Banks and Financial Liberalization: Recent Evidence – www.tandfonline.com [PDF]
  • An institutional model of the development process – www.tandfonline.com [PDF]
  • The Impact of International Convergence of Enterprise Accounting Standards on Enterprise Financial Management Practice – www.atlantis-press.com [PDF]