A “takeunder” is similar to a “takeover.” For a takeover, if a stock is trading at $20 a share, for example, the acquiring company might offer $22 . For a takeunder, a company might offer $18. Takeunders are rare because shareholders want a premium for their shares, not a discount. Shareholders might accept a discount only if their company is extremely distressed and the acquiring company is financially stable.
The term “takeunder” has been cited in print since at least 1990.
Definition of ‘Takeunder’
An offer to purchase or acquire a public company at a price per share that is less than its current market price. A takeunder is almost always unsolicited and generally occurs when the target company is in severe financial distress or has some other major problem that threatens its long-term viability, as a going concern. A takeunder is similar to a takeover in most respects, except for price, since a conventional takeover target would usually receive a premium to its market price from a potential bidder.
11 June 1990, St. Louis (MO) Post-Dispatch, “Making Heads Or Tails Out Of Bull” By John Crudele, pg. 4:
Takeunder: n. This is a takeover of a corporation, in which the buyer has such total control over a situation that he pays virtually whatever price he wants.
Report on Business Magazine
Volume 7, Issues 11-12
takeunder, n. The unconditional surrender of a faltering company to the first willing bidder that comes along.
28 May 1992, Chicago (IL) Tribune, “People,” pg. 2:
“It’s a takeunder.”—A disappointed stock speculator, describing the $2.8 billion plan for Sprint Corp. to buy Chicago-based Centel Corp. at a price far below what its stock had been fetching on Wall Street.
17 February 1996, Austin (TX) American-Statesman, “Takeovers to continue, but deals may be ,” pg. D8:difficult
The wiseguys on Wall Street called this a “takeunder.” Takeunders almost never work. Who’d sell their company for less than where the market values it and risk shareholder lawsuits? But takeunders do show a certain arrogance on the part of the corporate haves toward the corporate have-nots.
Dell in ‘take-under’ talks with Compellent
By David Goldman, staff writer December 9, 2010: 10:21 AM ET
NEW YORK (CNNMoney.com)—Dell Inc. said Thursday it was in talks with Compellent Technologies to buy the storage company for $27.50 per share.
The only problem: Compellent’s stock closed at $33.65 a share on Wednesday afternoon.
Takeover bids are typically offered at a premium in order to entice a buyout target to sell itself. But Dell’s bid is for nearly 20% less than Compellent’s trading price prior to the announcement of the deal. Nicknamed a “take-under,” the maneuver is a rarity in business.