On 21 October the Takeover Panel published its response to its consultation earlier this year on the regulation of takeovers. The consultation and response process follows on from the public debate on the UK takeover regime triggered by the takeover of Cadbury by Kraft earlier this year, and in particular the subsequent speeches by Roger Carr, former chairman of Cadbury and Peter Mandelson, then Secretary of State for Business, Innovation and Skills.

In its response the Panel has ruled out making some of the fundamental changes it had raised in its consultation (such as raising the acceptance threshold above 50% plus one, disenfranchising shares acquired during the offer period and providing protection to bidder shareholders). It has, however, concluded that bidders, particularly hostile bidders, have, in recent times, been able to obtain a tactical advantage over the target to the detriment of the target and its shareholders. It is therefore proposing to amend the Code with a view to reducing this tactical advantage and redressing the balance in favour of the target. Measures it is proposing include increased protection for targets against protracted virtual bids and a prohibition on deal protection measures and inducement fees (other than in certain limited cases).

For further details on all the issues addressed by the Panel please see the detailed e-bulletin that we have produced. The e-bulletin is available at http://www.herbertsmith.com/NR/rdonlyres/68FD4307-2FF2-41FB-AB14-B90066E0D8C2/0/regulationoftakeoverbidsintheUK.html. We have also produced an e-bulletin setting out some thoughts and implications for bidders, targets and their advisors which is available at http://www. herbertsmith.com/NR/rdonlyres/4024475B-F61A-4862- 82CDF96C98A2E468/0/ TheTakeoverPanelsrespon setoitsconsultationontheregulationoftakeoverbidsin theUKMAINh.html.