What is take over by reverse bid?

In ordinary cases, the company taken over is the smaller company. The concept of takeover by reverse bid, or of reverse merger, is thus not the usual case of amalgamation of a sick unit which is non-viable with a healthy or prosperous unit. Instead, it is a case whereby the entire undertaking of the healthy and prosperous company is to be merged and vested in the sick company, which is non-viable. A company becomes a sick industrial company when there is erosion in its net worth. This alternative is also known as taking over by reverse bid. The three tests to be fulfilled before an arrangement can be termed as a reverse takeover are specified as follows: The assets of the transferor company are greater than the transferee company.Equity capital to be issued by the transferee company pursuant to the acquisition exceeds its original issued capital.The change of control in the transferee company through the introduction of a minority holder or group of holders.