Question

'Nipro Electronics' was the leading player in the electronics industry for the last fifteen years. A few years back, Mobe Electronics', a smaller company as compared to 'Nipro Electronics', entered the market. 'Nipro Electronics' started losing its market share to Mobe Electronics' day-by-day due to its innovative products. To maintain or develop a competitive edge and to upgrade its technology, Nipro Electronics' decided to acquire 'Mobe Electronics' under friendly terms but that failed. Now it decided to buy majority shares of 'Mobe Electronics' and hence initiated the acquisition.

From the following, identify the type of acquisition which 'Nipro Electronics' adopted after failing on friendly terms:

Options

• Friendly acquisition

• Hostile acquisition

• Reverse acquisition

• Back-flip acquisition

Answer 1

Hostile acquisition

Explanation:

A hostile takeover occurs when a company (in this case, Nipro Electronics) attempts to acquire another company (Mobe Electronics) by purchasing a majority of its shares, even though the target company’s management is unwilling to agree to the acquisition. This method is often initiated when friendly negotiations fail.