normally you don't need to buy 100% of shares to have control.So theoretically, you can pay slightly higher price to get a deal with the majority to control the company. The overall costs of acquisition should be still lower than 100% purchase. Thus the majority enjoys the preferential treatment at the expense of the minority who won't get bought out. With 'tag along', you cannot do this. That's how it protects the minority shareholders.
-sannin99(雷蒙咨询);
2008-9-9{383}(#211@52)
Okay, that makes sense. Now, another question arises.My understanding of what you've said above, correct me if I'm wrong, is that a buyer has to purchase 100% of the stakes of a target company if minority
shareholders have the tag-along rights? Or only if minority shareholders decided to exercise such rights?
-specialday(Joyce);
2008-9-9{261}(#213@52)
Is that something called "unsolicited offering bid"? Once your % of all outstanding shares reached a threshold (60% or sth like that?), you have to offer to buy up all. Correct me if I wrong, too old to remember those stuffs learned before.
-cosmoyx(My way);
2008-9-9(#217@52)
After a good workout and some nice tea, now my understanding is:After those majority shareholders offered to sell their stakes in a company, under Drag Along Rights term, the minority shareholders have the OBLIGATION to sell their stakes (at the same price and other terms); however, under Tag Along Rights term, the minority shareholders have the OPTION to sell their stakes (at the same price and other terms), of course, they may choose not to sell and cause trouble for the transaction.
-cosmoyx(My way);
2008-9-9{426}(#216@52)