Aren’t these new UK Takeover Panel rules fun?
On Monday morning we’ve been treated to the sight of several companies being forced to reveal more about the takeover offers they have received.
For example
On 31 August 2011, Merchant Securities Group plc (the “Company”) announced that it had received a preliminary approach in relation to a possible offer for the Company from Sanlam UK Limited (“Sanlam”), a wholly owned subsidiary of Sanlam Limited, a leading South African Financial Services group. As announced on 1 September 2011, Sanlam has indicated that any offer, if made, will be satisfied entirely in cash and will not include shares in Sanlam Limited.
On 22 August 2011, Parseq announced that it had received an approach from a potential offeror led by Rami Cassis, the Company’s Chief Executive, in relation to a possible offer for the Company. Further to that announcement, the Company today announces that the approach has been received from Rami Cassis together with Nova Capital and funds managed by HarbourVest Partners, LLC in relation to a possible offer for the Company (together the “Potential Offeror”) through a newly incorporated entity (“Bidco”). Any offer by the Potential Offeror is likely to be solely in cash and the indicative offer price is 7.5 pence per ordinary share.
And here is the first company to reveal its suitor, Travelzest.
Travelzest plc (AIM: TVZ), an online travel group specialising in providing a broad base of travel products and travel programmes for consumers in North America and the United Kingdom, announces that, the Company is in the very early stages of discussions, which may or may not lead to an offer, with Red Label Vacations Inc. (“Red Label”) in relation to a possible offer for the Company. Any offer by Red Label is likely to be solely in cash.
OK. Not exactly household names. But we are still waiting for statements from racecourse operator Arena Leisure and troubled retailer Alexon, both of who have revealed takeover approaches but have yet to disclose the identity of the bidder.
They have until 5.00pm UK time to spill the beans.
From the Takeover Panel implementation document:
In order to put all offer periods on a similar footing, where an offeree company is already in an offer period on the Implementation Date, the offeree company will be required, by not later than 5.00 pm on the Implementation Date, to announce the identity of any potential offeror with which it is in talks, or from which it is in receipt of an approach, if, at the commencement of the offer period, it was in talks with, or had received an approach from, that offeror.
Under the new rules, which have been designed to provide greater disclosure around takeover situations and are effective from today, all target companies must reveal the bidder as soon as they enter an official takeover period.
For their part, the bidder now has 28 days to come up with a formal offer. Hence the following headlines this morning:
In accordance with Rule 2.6(a) of the Code, Ladbrokes is now required, by not later than 5.00 p.m. on 17 October 2011, to either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.
On 9 August and 15 August 2011, Coolabi plc announced that it had received an approach regarding a possible offer for the Company by North Promotions Limited. In accordance with Rule 2.6(a) of the Takeover Code (the “Code”), North Promotions must, by no later than 5.00pm on 17 October 2011, either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code.
Tick, tock. Tick, tock, bidders.
It will be interesting to see what impact these new rule changes make. Bankers claim it will shift the balance of power in a takeover situation and make it easier for companies to defend themselves. This is unwelcome because underpeforming companies need to be put out of their misery. It might also scare off US companies, which generally hate commenting on M&A speculation.
That said, there’s no reason why a predator should not be in a position to make an offer after 28-days if they have done their homework. Moreover, the Panel is likely to look favourably on companies who request and extension to the deadline. So the idea that the rule change will kill private equity bids, because they need a longer period of due diligence than a corporate buyer, looks to be wide of the mark.
And that’s the point with these rule changes. They are not prescriptive. The Panel is always prepared to be pragmatic and judge takeovers on a case by case basis. All it’s all about the spirit of the law, not the letter. As such there really shouldn’t be anything to worry about.
Related link:
UK deadline looms to out secret suitors – FT