The UK Panel on Takeovers & Mergers announced recently the implementation of certain new rules in its rule book, the City Code on Takeovers & Mergers (the “Takeover Code”), which will apply to takeovers (and similar transactions) involving relevant UK companies.
The Takeover Code applies, amongst other things, to transactions involving certain takeovers of or mergers with UK listed companies and certain transactions involving the acquisition of an interest in 30% or more of the total voting rights in a UK listed company (“Relevant Transactions”). The Takeover Code also applies to certain transactions involving unlisted and/or private target companies with registered offices in the UK, the Channel Islands or the Isle of Man (“Relevant Jurisdictions”).
The changes, which became effective on 30 September 2013, relate to, amongst other things:
- Changing the jurisdiction of the Takeover Code – the Takeover Code will now also apply to Relevant Transactions involving target companies whose shares are traded on a multilateral trading exchange or stock exchange in one of the Relevant Jurisdictions, even where such target companies are managed and controlled outside of such Relevant Jurisdictions, provided the registered office of such companies is within one of those jurisdictions. This change means that the Takeover Code now applies to takeovers for a much wider range of companies including many AIM listed companies whose business, assets and control have been kept outside of the Relevant Jurisdictions (e.g. many AIM listed natural resource businesses with assets abroad).
- Changing the regime for profit forecasts and other “quantified financial benefits statements” – the Takeover Code historically required formal public reporting on profit forecasts made by certain bidders or targets during or before takeover bids. Those rules have now been relaxed in certain cases, made harsher in other cases, extended to cover other statements (quantified financial benefits statements – e.g. statements relating to costs savings) and certainly made clearer. The regime is complex and the key message from the changes is that bidders or targets thinking of referring to profit forecasts or quantified financial benefits statements during takeover bids should consult with their legal and financial advisers.
- Reporting of material changes during takeovers – the new rules are more onerous in requiring bidders and targets to consider any material changes to information that they have previously provided during the course of a takeover bid and to update the market if such changes have occurred.
Reporting of material changes during takeovers – the new rules are more onerous in requiring bidders and targets to consider any material changes to information that they have previously provided during the course of a takeover bid and to update the market if such changes have occurred.
Over recent years, takeovers by PRC or Hong Kong bidders for UK listed companies have included:
Ziamen Zijin Tonguan Investment Development Company Limited’s bid for Monterrico Metals plc; Sinochem Corp’s bid for Emerald Energy plc; Guangdong Rising Assets Management Co., Ltd’s bid for Caledon Resources plc; Cheung Kong Infrastructure Holdings Limited, Cheung Kong (Holdings) Limited and Li Ka Shing Foundation Limited’s bid for Northumbrian Water Group plc; CGNPC Uranium Resources Co Limited/ Taurus Mineral Limited’s bid for Kalahari Minerals plc; Chengdu Geeya Technology Co., Ltd’s bid for Harvard International plc and, currently, Qingdao D&D Investment Group Co. Ltd’s possible bid for 600 Group plc.