A long standing and commonly asked question looks like it may shortly be resolved following the recent issue of a Consultation Paper by the Australian Takeovers Panel (Panel) in respect of Guidance Note 1 on Unacceptable Circumstances.
The proposed revision to the Guidance Note broadly states that unacceptable circumstances are likely to arise if, after a bidder has made a statement that they will not increase their bid (commonly referred to as a “best and final” statement), that bidder (or an associate) then makes another bid within four months after the bid closes and offers increased consideration.
A general principal of Australian takeovers regulation (referred to as the “truth in takeovers” policy) is that a person who makes a statement in the context of a takeover should be held to account for that statement (irrespective of whether they are the bidder, the target or a shareholder). You can see our previous article here for more information.
Relevantly, the proposed revision leaves the door open for a bidder to qualify their “best and final” statement, provided that any such qualification is clearly stated. However, practically, it is difficult to foresee a situation where such a qualification would be made, given that a “best and final” statement is a powerful tool for bidders in seeking to procure acceptances from target shareholders.
In our view, the proposed four month “wait period” between bids is a reasonable price to pay given the influential effect that a “best and final” statement can have on target shareholders.
The Consultation Paper is open for submissions until Friday, 20 April 2018.