Are the rules for UK listed com­pany takeovers about to get tougher?

New pa­per sug­gests bid­ders should say what will hap­pen to tar­get’s head of­fice and R&D func­tions

Shares - - CONTENTS -

The Takeover Panel has, in a pa­per is­sued on 19 Septem­ber, made pro­pos­als re­quir­ing buy­ers of pub­licly listed UK com­pa­nies to re­port back on cer­tain mat­ters one year after com­plet­ing their ac­qui­si­tion. The Panel wants to see if ac­quir­ers have kept their word about plans an­nounced at the time of an ac­qui­si­tion.

Cur­rently a bid­der must make state­ments of in­ten­tion with re­gard to the busi­ness, em­ploy­ees and pen­sion schemes of the of­feree com­pany. The pa­per is con­sult­ing on whether bid­ders should be re­quired to make ad­di­tional, more spe­cific state­ments of in­ten­tion re­gard­ing the tar­get, namely:

Sen­si­tiv­ity with re­spect to such mat­ters is in­creased when the bid­der is a non-UK one; and such changes have been in­ter­preted as be­ing di­rected at foreign bid­ders. Though in fact the pro­pos­als ap­ply to all bid­ders re­gard­less of ori­gin it may suit cer­tain stake­hold­ers to present it dif­fer­ently.

Changes were made only a few years ago to al­low for a regime of a) bind­ing post of­fer un­der­tak­ings and b) state­ments of in­ten­tion that would, in the lat­ter case, hold for 12 months post com­ple­tion not­with­stand­ing any change in hon­estly held be­lief since the time of the rel­e­vant state­ment.

It should be noted that there is a dif­fer­ence be­tween the two types of state­ments and the regime al­lows for in­ten­tions to change with time sub­ject to con­sul­ta­tion with the Panel and chang­ing cir­cum­stances.

At present, the bid process is a highly con­sid­ered and heav­ily ad­vised upon one.

Bid­ders and their ad­vis­ers ex­am­ine each word of any state­ment made in con­nec­tion to a bid to de­ter­mine its ap­pro­pri­ate­ness and to en­sure that mis­lead­ing state­ments are not made and a false mar­ket is not cre­ated.

It stands to rea­son that in­creas­ing the ar­eas where spe­cific state­ments of fu­ture in­ten­tion are to be made – that the same care will be ap­plied to such state­ments.

The Takeover Panel’s pa­per also pro­poses that such state­ments be made, ear­lier, i.e. at the time of the an­nounce­ment by the bid­der of its firm in­ten­tion to make an of­fer.

The pro­vi­sion of an an­nual pub­lic com­pli­ance regime whereby state­ments are re­ported on will be use­ful for in­creas­ing trans­parency and ac­count­abil­ity for state­ments (whether truly bind­ing or not) in the course of a bid.

It is worth not­ing that the City Code on Takeovers and Merg­ers only ap­plies to Code gov­erned com­pa­nies, and does not pro­vide an an­swer to the same is­sues that arise in the con­text of takeovers of pri­vately owned/non-Code gov­erned com­pa­nies. A Code gov­erned com­pany is pre­dom­i­nantly a UK com­pany listed on the Lon­don Stock Ex­change.

By Mark Crofskey, so­lic­i­tor, head of cor­po­rate M&A; and Jon Raggett, direc­tor, cor­po­rate fi­nance at PwC.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.