Once a takeover bid is formally made, shareholders in the target company may choose to accept the offer or not. When shareholders accept the offer, they do not immediately sell their shares to the bidder. This has two main implications:
- The bidder does not have to buy the shares unless the offer becomes unconditional.
- The shareholders accepting the offer will get the benefits of any improvements to the offer after accepting it.
The City Code's timetable for bids sets out a timetable that (among other things) limits the time between when the bidder starts being open to acceptances and the latest date for the actual purchase of the shares.
It is usual for a bid to become unconditional as to acceptances once the bidder has received sufficient acceptances to give the bidder (and concert party, if any) a 90% holding. This is because a bidder who succesfully acquires a 90% stake can buy the remaining 10% at the same price through a compulsory acquisition.