Unlawful Takeover

The market is quite healthy lately with news of acquistions and mergers and takeovers and even lawsuits becomes more frequent.

Some of the hottest news are the takeover bid for EONCAP by HL Financial Group and and at KNM by its Managing Director.

The former was successful but the later was not so fortunate. KNM bought over Borsig or FBM of Germany for rm7.9B in 2006 and as the acquisition are that of strategic importance, the company has requested for tax exemption from the Government.

What’s interesting is that the tax exempt given has a clause that prevented such takeovers. Smart move huh ?

This ain’t new.

It’s a common practice by corporate leaders to have ‘posion pill’ in their company in the event of takeovers, or simply to prevented one.

A decade ago Celcom is facing hardship after taking over TRI, which resulted them to owing debt to an overseas partner of more than rm300 million (if i recall correctly).

So,  before you undertake such crucial manuevers, conduct due diligence. Even on your partner.

Further reading :
http://en.wikipedia.org/wiki/Poison_pill
http://www.btimes.com.my/Current_News/BTIMES/articles/leesw-2/Article/index_html

http://biz.thestar.com.my/news/story.asp?file=/2008/10/13/business/2248465&sec=business