What is an any-and-all bid takeover?

An any-and-all bid takeover is when one company wants to buy another company. The buying company says it will pay the same price for every share of the company it wants to buy.

This is different from a two-tier bid, in which people who sell their shares early get more money. With an any-and-all bid, everyone receives the same amount, no matter when they sell.

Why companies use any-and-all bids

Companies use any-and-all bids when they want to buy from another company. Offering the same price to everyone is a solid way to get people to sell their shares.

The buying company wants to acquire as many shares as possible. If it owns enough shares, it can take over the other company. Usually, it needs to acquire more than 50% of the shares to be in control.

How any-and-all bids work

First, the buying company decides how much it is willing to pay for each share. It wants a price high enough that shareholders will sell but not so high that the company overpays.

Next, the company makes an offer to buy shares at that price. The offer is open to all shareholders, whether they have many or only a few.

The offer is open for a set of days, like 30 days. During this time, shareholders can choose to sell or not sell their shares to the buying company at the set price.

Benefits of any-and-all bids

Any-and-all bids have some good things about them:

Fair for all shareholders

In an any-and-all bid, all shareholders are treated the same. No one gets special treatment for selling early. This seems more fair to many people.

It is simpler than two-tier bids.

Any-and-all bids are simpler than two-tier bids. There is just one price and one deadline, whereas two-tier bids have different prices and deadlines, which can be confusing.

The more straightforward approach of any-and-all bids makes the process go more smoothly. Shareholders understand the deal, and the company can finish buying shares faster.

Shows commitment to the deal

Using an any-and-all bid shows that the buying company is serious and willing to pay the same high price to all shareholders.

This strong commitment makes shareholders more likely to accept the offer and sell. They feel the buying company won’t back out of the deal.

Downsides of any-and-all bids

There are also some bad parts about any-and-all bids:

It can be expensive to buy the company

In an any-and-all bid, the buying company has to pay top dollar for every share. Even if some shareholders would sell for less, the company still pays the high price.

This can make the takeover very expensive. The company has to be sure it is worth the high cost. Paying too much can hurt the business.

It doesn’t push shareholders to decide quickly.

Two-tier offers give shareholders a reason to sell fast before the price decreases. But any-and-all offers don’t provide this push.

Shareholders might wait until the last minute to sell, which can make the process take longer and leave uncertainty about whether the takeover will happen.

Choosing any-and-all or two-tier

Companies must carefully consider which type of bid to use. Any-and-all and two-tier bids each have pros and cons.

When any-and-all is best

Any-and-all is often used when a company knows shareholders want a reasonable price. If shareholders feel the price offered is fair, they will likely sell.

It also helps if the buying company has a good relationship with shareholders. If there is trust, an any-and-all bid at a fair price will get support.

Any-and-all works well when a company wants to appear fair and friendly in a takeover. It doesn’t force shareholders to rush a decision.

When two-tier is best

Two-tier bids help when shareholders may be unsure about selling. The higher early price pushes them to make a choice and sell.

Two-tier bids can still persuade shareholders to sell if a takeover is unpopular. The buying company doesn’t care as much about looking nice as it does about controlling the other company.

Two-tier bids can sometimes be cheaper overall. Only some shareholders get the high price. The rest get less later on.

Real-world examples

Some famous any-and-all takeovers include:

Oil company Chevron bought Texaco in 2000 for $36 billion. All Texaco shareholders got $64.87 per share.
Drug company Pfizer bought competitor Warner-Lambert in 1999 for $90 billion. Warner-Lambert shareholders received $102 per share in cash and stock.
Media company AOL bought Time Warner for $182 billion in 2000. AOL offered 1.5 of its shares for each Time Warner share.