What Is Assented Stock? A Guide to Takeover Agreement Shares

What Is Assented Stock?

Assented stock is held by shareholders who accept a takeover bid, while non-assented stock is held by those who refuse, which can matter in a two-tier offer where accepted shares get a higher price. Non-assenting holders may face worse terms or less liquidity as control shifts. Assented shares can trade separately during the bid, then may be converted or absorbed after the takeover closes.

How Assented Stock Affects Shareholder Decisions

Acquiring companies may take a two-tier approach when making a takeover bid. A two-tier bid, also known as a two-tiered tender offer, occurs when the acquiring company is willing to pay a premium above and beyond the target's current market price in order to convince its shareholders to sell their shares.

The acquirer will offer a higher price to enough shareholders to rack up the number of voting rights required to obtain a controlling interest in the company. The shareholders who accept this highest price hold assented shares. (It's called a "two-tiered offer" because the acquirer gets control over the target in the initial tier, but then makes another, lower offer for more shares through the second tier that is completed at a future date.)

Shareholders who own non-assented shares—who aren't agreeing to the acquisition—may be relying on company management employing poison pill defenses, such as a back-end plan, to dilute the voting power that assented stock will provide to the acquiring company.

Trading and Market Implications of Assented Stock

Often, assented stock becomes untradeable: It is deposited in a separate account, held by a third party, until the acquisition goes through.

However, sometimes assented shares may be traded on a separate market from non-assented shares, with the acquiring company setting up the market so that shareholders who have accepted the takeover share price can continue trading their shares. This separate market, referred to as an assented share trading facility, is established so that the value of the assented shares is set at the price that the acquiring company has indicated that it will pay, which may be higher than the amount non-assented shares would fetch on the open market.

If, in the interim and before the takeover happens, the assented shareholder sells their stock, the buyer committs automatically to accepting the acquirer's bid.

The Bottom Line

Assented stock is held by shareholders who accept a takeover bid, while non-assented stock is held by those who refuse, which can matter in a two-tier offer where accepted shares get a higher price. Non-assenting holders may face worse terms or less liquidity as control shifts. Assented shares can trade separately during the bid, then may be converted or absorbed after the takeover closes.