Concern over Panel proposal that all potential offerors should be named when an offer period commences
The City of London Law Society Company Law Sub-Committee (the Committee) has published the response of its Takeovers Joint Working Party to the Takeover Panel’s final consultation paper on the regulation of takeover bids. The Committee’s main letter of response can be read here and its detailed comments can be read here.
The Takeover Panel consultation PCP2011/1, which contained final proposals on how the Takeover Code rules governing takeovers of public companies should be amended, closed at the end of May 2011; we discussed the consultation paper in this post.
The Committee’s principal objection is to the Panel’s proposal that when an announcement of a possible offer is made under Rule 2.4, that announcement should be required to identify any potential offeror with whom the offeree company is in talks or from whom it has received an approach (which has not been unequivocally rejected) with regard to a possible offer. The Committee’s view is that this change would
“present material impediments to the ability of offeree companies to negotiate recommended transactions with offerors who are welcome and provide an outcome for shareholders that the offeree board believes is the best available.”
In particular, the Committee argues that the knowledge that all potential offerors would be named upon the making of an offer announcement would be open to abuse by offerors and would introduce more complexity to the takeover rules. Instead, the Committee suggests that it should be the offeree board that decides whether a potential offeror should be publicly identified.
The Committee’s other main concern on the Takeover Panel’s proposals is a related one; it opposes the suggested imposition of a formalised private lock-out of potential offerors which have withdrawn rather than be identified in a possible offer announcement.
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