Mergers and Acquisitions Takeover Public Offers
The Panel on Takeovers and Mergers: statutory powers to regulate takeovers under Chapter
1 Pt 28 of CA 2006. 2 roles: rule-making, judicial. 36 members.
The Takeover Code
1: An offeror (or its advisers) must notify a firm intention to make an offer in the first instance to the
board of the offeree company (or its advisers).
2: secrecy - Prior to the announcement of an offer or possible offer, all persons privy to confidential
information, and particularly price-sensitive information, concerning the offer or possible offer must
treat that information as secret and may only pass it to another person if it is necessary to do so and
if that person is made aware of the need for secrecy. All such persons must conduct themselves so as
to minimise the chances of any leak of information.
6: ACQUISITIONS RESULTING IN AN OBLIGATION TO OFFER A MINIMUM LEVEL OF CONSIDERATION.
10: the acceptance condition. Any offer for voting equity share capital or for other transferable
securities carrying voting rights which, if accepted in full, would result in the offeror holding shares
carrying over 50% of the voting rights of the offeree company must include an acceptance condition
that is not capable of being satisfied unless the offeror has acquired or agreed to acquire (either
pursuant to the offer or otherwise) shares carrying over 50% of the voting rights.
11: nature of consideration to be offered. Offers for cash.
14: where there is more than one class of share capital. Where a company has more than one class
of equity share capital, a comparable offer must be made for each class whether such capital carries
voting rights or not; the Panel should be consulted in advance.
19: Each document, announcement or other information published, or statement made, during the
course of an offer must be prepared with the highest standards of care and accuracy.
20.1: information and opinions relating to an offer or a party to an offer must be made equally
available to all offeree company shareholders and persons with information rights as nearly as
possible at the same time and in the same manner.
20.4: Social media must not be used by or on behalf of an offeror or the offeree company to publish
information relating to an offer, other than for the publication of: (a) the full text of an
announcement which has been published in accordance with Rule 30.1(a), (b) the full text of a
document which has been published on a website in accordance with the relevant provisions of the
Code; (c) a video which has been published with the prior consent of the Panel in accordance with
Rule 20.3; or (d) a notification of a link to the webpage on which such an announcement, document
or video has been published.
23: Shareholders must be given sufficient information and advice to enable them to reach a properly
informed decision as to the merits or demerits of an offer. Such information must be available to
shareholders early enough to enable them to make a decision in good time. No relevant information
should be withheld from them. The obligation of the offeror in these respects towards the
shareholders of the offeree company is no less than an offeror’s obligation towards its own
shareholders.
24: Except with the consent of the Panel, the offeror must, within 28 days of the announcement of a
firm intention to make an offer, send an offer document to shareholders in the offeree company and
persons with information rights, in accordance with Rule 30.2.
25: Except with the consent of the Panel, the board of the offeree company must, by no later than
Day 14, send a circular to shareholders in the offeree company and persons with information rights,
in accordance with Rule 30.2
30: distribution of documents during an offer. Any announcement required to be published under
the Code must be published via a RIS. Methods of publication.
31: timing of the offer - Except with the consent of the Panel, all of the conditions to an offer must be
satisfied or waived, or the offer must lapse, by midnight on Day 60. An offeror which wishes to
, specify an unconditional date in the initial offer document which is earlier than Day 60 must consult
the Panel in advance and will normally be treated as having made an acceleration statement.
When does the takeover code apply?
1. Intro section 3(a)(i)
– a public company, or UK Societas
– with its registered office in the UK, the Channel Islands or the Isle of Man
– whose securities are admitted to trading:
(i) on a UK regulated market (such as the Main Market, which is the focus of this
book); or
(ii) on a UK multilateral trading facility (such as AIM); or
(iii) on any stock exchange in the Channel Islands or the Isle of Man.
2. Intro section 3(a)(ii)
– any other public company, or UK Societas (including unlisted public companies) which
(i) has its registered office in the UK, the Channel Islands or the Isle of Man; and
(ii) in the Panel’s opinion, has its place of central management and control in the UK,
the Channel Islands or the Isle of Man
– or a private company but only if it has during the last 10 years:
(i) had its securities admitted to trading on a UK regulated market or UK MTF or on
any stock exchange in the Channel Islands or the Isle of Man; or
(ii) advertised dealings for a six-month continuous period; or
(iii) has filed a prospectus; or
(iv) had securities subject to a CA 2006, s 693(3) marketing arrangement); and
(v) has its registered office in the UK, the Channel Islands or the Isle of Man, and
(vi) in the Panel’s opinion, has its place of central management and control in the UK,
the Channel Islands or the Isle of Man.
Purpose of the takeover code:
The Introduction to the Takeover Code explains, in para 2, that its purpose is to: (a) ensure fair and
equal treatment of all shareholders in an offeree company in relation to takeovers; (b) provide an
orderly framework within which takeovers are conducted; and (c) promote the integrity of the
financial markets.
General Principles of takeover code
A. shareholders should be treated equally and fairly.
B. sufficient information should be made available to shareholders in a timely
fashion, to enable them to decide whether to accept or reject the offer.
C. Directors have duties of fairness in relation to takeovers.
D. Parties should not commit market abuse, etc.
E. The bidder must be in a position to pay for the offeree company’s shares.
F. The offer timetable should not drag on.
Enforcement:
Anyone reporting a breach to the Panel must do so promptly, otherwise the Panel may
exercise its discretion to disregard the complaint (Introduction to the Takeover Code, para
10(a)).
Panel has power to make a compliance ruling – para 10(b).
The Panel has a limited power to make a compensation ruling to order a party to
compensate any offeree company shareholders who have suffered financially as a result of a
breach of the Code – para 10(c).
