Compulsory acquisition

In order to prevent a small number of people from blocking a takeover bid, a bidder who buys more than 90% of a company can compel the remaining shareholders to sell.

The terms on which the sale is compelled are regulated by the City Code, which essentially requires that the terms are as good as those offered to other shareholders who sold during the bid.

While this often feels unfair to the shareholders who are compelled to sell, the intent is to allow shareholders to, in effect, agree to sell a company in toto without being blocked by a small minority.

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