Most takeovers of companies are agreed by their respectiveboards of directors. A company will typically make an offerfor all of the shares of another company, and ask its directorsto recommend the offer to their shareholders. If the directorsrecommend the offer, and the shareholders agree with theprice, the takeover will go ahead.
However, sometimes acompany's directors may feel that a takeover bid undervaluesthe shares, and so do not recommend the offer to shareholders.The bidding company could always drop the bid and walkaway. But if it wants to press on, it can instead approach theshareholders directly and offer to buy their shares.
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