Agreed takeover bid

An agreed takeover bid, as opposed to a hostile one, is a bid that is recommended to the shareholders by the directors of the company being bought.

Although it is common for the directors of the target of a bid to go to great lengths to oppose it, there are a number of reasons why they may recommend one:

• They are honestly trying to fulfil their duty to shareholders.
• They will be offered positions on the board of the combined company.
• A takeover is inevitable and the directors prefer this particular one.
• Major shareholders back the bid, so there is little point opposing it.

The recommendation of a bid is usually motivated by several of these motives.