The Takeover Panel has published its recommendations for an overhaul of the City’s Takeover Code.
Via Reuters.
- UK’S TAKEOVER PANEL SAYS CONCLUDED AMENDMENTS SHOULD BE MADE TO THE TAKEOVER CODE UK’S TAKEOVER
- PANEL SAYS HOSTILE BIDDERS HAVE BEEN ABLE TO GET TACTICAL ADVANTAGE, CODE SHOULD CHANGE TO REDRESS BALANCE
- UK’S TAKEOVER PANEL SAYS WILL NOT RAISE THRESHOLD FOR BID SUCCESS FROM 50% PLUS ONE SHARE
- UK’S TAKEOVER PANEL SAYS WILL NOT DISENFRANCHISE THOSE WHO BUY SHARES DURING OFFER PERIOD
- UK’S TAKEOVER PANEL SAYS PLANS TO REQUIRE POTENTIAL OFFERORS TO CLARIFY THEIR POSITION WITHIN A SHORT PERIOD OF TIME
- UK’S TAKEOVER PANEL SAYS PLANS TO REQUIRE DISCLOSURE OF OFFER RELATED FEES
But what’s not being recommended is more much interesting than what is being recommended.
Specifically, the Panel is not going to recommend a change in the acceptance threshold for hostile bids – currently 50 per cent plus one share – or that shares acquired during hostile situations should be disenfranchised.
Those bucks have been passed to the government:
The Code Committee considers that, if company law were to be amended so as to raise the threshold for the passing of ordinary resolutions, it would be logically consistent for the acceptance condition threshold for offers that are subject to the Code to be conformed with the new ordinary resolution threshold. In the absence of such changes in company law, the Code Committee does not believe that the Code should be so amended.
However, the Code Committee understands that qualifying periods (or weighted voting rights) could be introduced through changes in company law. If such changes were to be made, the Code Committee considers that it would be logically consistent for the Code to be amended accordingly. In the absence of such changes, the Code Committee does not believe that the Code should be so amended.
And surely the Business Secretary wouldn’t introduce anything that smacked of French-style corporate protectionism. Would he? Then again wasn’t the MP for Twickenham fiercely vocal about short-term speculators determining takeover bids? Or are just making that up?
(Updates to follow, once we have been through the massive statement).
Update: 12.34pm (BST)
Cable seems very happy with the changes:
Via Reuters:
- UK’S CABLE SAYS WELCOMES OUTPUT OF UK TAKEOVER PANEL’S REVIEW; “IT HAS BECOME TOO EASY FOR BIDDERS TO MAKE HOSTILE OFFERS”
-UK’S CABLE: “PLEASING THE PANEL HAVE DECIDED TO TAKE CONCRETE STEPS TO ADDRESS THIS CENTRAL CONCERN” ABOUT HOSTILE TAKEOVERS
So what are these concrete steps? Well, effectively they amount to speeding up the whole process and stopping virtual bids or bear hugs.
These are the situations when one party says it might bid but doesn’t actually table an offer and or say when it might. The share register is then turned upside down as hedge funds buy and long only funds sell out. The target company then finds itself under siege and more often than not under pressure to sell out:
In the light of the above, the Code Committee proposes to introduce amendments to the Code as follows:
(i) to require that, following an approach, the potential offeror is named in the announcement which commences an offer period regardless of which party publishes the announcement;
(ii) to require that, except with the consent of the Panel, any publicly named potential offeror must, within a fixed period of four weeks following the date on which the potential offeror is publicly named:
(a) announce a firm intention to make an offer under Rule 2.5; or
(b) announce that it will not make an offer, whereupon it will then be subject to the restrictions referred to in Rule 2.8; or
(c) make an application jointly with the offeree company for an extension to the deadline and explain the expected timetable to 12 the announcement of a firm intention to make an offer under Rule 2.5, following which an announcement would normally be required to be published updating the market on the status of the discussions and the revised deadline.
Related Links:
Cadbury Laws Get Green Light From City Watchdog – Mark Kleinman
‘Put-up or shut-up’ faces tightening – FT
Review of certain aspects of the regulation of takeover bids – Takeover Panel