Recent statements made at the Labour Party Conference suggest that market participants may in the future need to give even more significant thought to the employment and pensions aspects of takeovers in the United Kingdom.

John McDonnell, Shadow Chancellor of the Exchequer, said on Monday 26 September, that "we’ll rewrite the Takeover Code to make sure every takeover proposal has a clear plan in place to pay workers and pensioners.”

So while most practitioners familiarise themselves with the changes introduced by RS 2016/1 (the communication and distribution of information during an offer), more radical changes to the Code may be on the horizon. It seems that the following have been judged by some as not providing sufficient protection for workers and pensioners:

  • the current Code provisions covering employee representatives and pension scheme trustees
  • the post-offer undertaking regime (see Rule 19.7 of the Code), used for the first time on the recent takeover of Arm Holdings by Softbank.

Further information on the changes introduced by RS 2016/1 can be found in our recent takeover code update.

The post-offer undertakings given by Softbank included a specific undertaking to double the total number of UK ARM Group employees over a five year period.