Company Acquisition, Takeover vs acquisition and holding copany
A fundamental characteristic of merger (either through absorption or consolidation) is that the acquiring or amalgamated company (existing or new) takes over the ownership of the other company and combines its operations with its own operations. Acquisition may be defined as an act of acquiring effective control over assets or management of a company by another company without any combination of businesses or companies. A substantial acquisition occurs when an acquiring firm acquires substantial quantity of shares or voting rights of the target company.
Takeover
Generally speaking takeover means acquisition. A takeover occurs when the acquiring firm takes over the control of the target firm. An acquisition or take-over does not necessarily entail full, legal control. A company can have effective control over another company by holding minority ownership.
Takeover vs. acquisition
Sometimes, a distinction between takeover and acquisition is made. The term takeover is or unwilling acquisition, it is called a takeover. In an unwilling acquisition, the management of Target Company would oppose a move of being taken over. When managements of acquiring and target companies mutually and willingly agree for the takeover, it is called acquisition of friendly takeover.
Holding company
A company can obtain the status of a holding company by acquiring shares of other companies. A holding company is a company that holds more than half of the nominal value of the equity capital of another company, called a subsidiary company, or controls the composition of its board subsidiary company, or controls the composition of its board of directors. Both bolding and subsidiary companies retain their separate legal entities and maintain their separate books of accounts. Unlike some countries, like the USA, or the UK, India is not legally required to consolidate accounts of holding and subsidiary companies.