Takeover materials
What is a takeover document?
If your company is involved in a takeover bid
or issuer bid, you will receive printed material, known as a circular, describing the bid in detail. In a takeover, you will also receive a directors’ circular setting out whether the directors recommend that you accept or reject the bid.
You may also want to use SEDAR to see if anyone has filed an early warning report.
What do you need to do?
If you receive a takeover circular, you need to decide whether to sell your shares to the person making the offer. You normally have a little over a month to make your decision. You may want to wait to see what the directors recommend to shareholders. In addition, you may want to wait until the end of the period to see if a competing bid appears, or if the original bidder increases the price or otherwise changes the bid terms.
Often the price of the company’s shares will go up while a take over bid is underway and you can choose to sell your shares into the market.
What happens if you decide to sell?
If you decide to sell your shares to the bidder, you will receive cash or the bidder's shares after the bid expires. Some bids are unconditional, but many are subject to conditions, such as the bidder acquiring a certain number of shares. This means that even if you decide to sell, the bidder may not actually take your shares, if the conditions are not met.
If you decide not to sell your shares, you will continue to hold shares of the original company.
If the person making a takeover bid acquires at least 90% of the shares of the company, they can force you and other remaining shareholders to sell your shares at the same price as offered under the bid.
If the bidder acquires more than two-thirds, but less than 90%, of the company shares they may call a shareholder meeting to vote on a merger between the company and the bidder. If you do not vote in favour of the merger, the bidder will offer you the same price per share that was offered under the bid.
If the person making the bid acquires more than 50%, but does not acquire your shares, that person will have control of the company and can make changes, including appointing their own nominees as directors.
What should you focus on?
There are two types of takeover bids. In a cash bid, the bidder offers to buy your shares for cash, similar to an issuer bid. You will need to consider whether you want the money now or want to remain a shareholder. You should also consider how the offer price compares to the market price for your shares and whether you’re comfortable with the person making the offer.
In a share-exchange bid, the person offering to buy your shares will pay you with shares in another company. Some offers are a mix of cash and shares. If the bid is successful and you sell your shares, you’ll end up holding shares in the other company.
Whenever you receive shares of another company in payment, you need to focus on whether you want to invest in that company. Read the bid circular carefully and assess the following factors in view of your investment goals:
- The directors and management team
- The risks associated with investing in that company
- The financial position of that company
- Whether it pays dividends, interest or other distributions
If the new company is already public, go to SEDAR and review the company’s documents.
What questions should you ask yourself?
Questions: Takeover materials 
are available as a separate form to download and print.