Summary: New proposals have been published by the Code Committee of the Takeover Panel (the “Committee”) to address: (i) the lack of specificity around statements of intention; (ii) their timing; and (iii) to require public reports of post-offer undertakings and post-offer intention statements. Comments are requested by 31 October 2017.
The Government welcomes these proposals, stating “The Takeover Panel is a respected and important part of this regime and the Government welcomes the valuable changes it is proposing. They will require bidders to make earlier and fuller disclosure of their plans for the target company, including its research and development, location of HQ, and the composition and skills of its workforce; and give companies subject to a bid more time to prepare their response”.
Statements of intention
Currently, in an offer document, the offeror must explain the long-term justification for the offer and its intention with regard to the future business of the offeree company including employment and pensions (Rule 24.2). In turn, the offeree must give an opinion on the effects of the offer taking into account the company’s interests including employment (Rule 25.2).
To address the lack of specificity of certain statements of intention made by offerors, the Committee proposes to extend Rule 24.2 to include a requirement for an offeror to state in respect of both offeree and, where appropriate, itself:
- its intentions for the offeree company’s research and development functions and any material change in the balance of the skills or functions of the offeree company’s employees and management; and
- the likely repercussions of its strategic plans on the location of the offeree company’s headquarters and its functions.
Timing of statements of intention
The Committee proposes to bring forward the requirement for an offeror to make statements of intention in respect of both offeree and, where appropriate, itself, to the time of the firm offer announcement. It believes that this would make it more practicable for offeree company’s employee representatives or pension scheme trustees to give a meaningful opinion on the effects of the offer in the combined document (offer document and offeree board circular) and to allow more informed debate between stakeholders on the merits of an offer.
Offeror not to publish offer document for 14 days without offeree board consent
To allow the offeree board more time to consider and formulate views on an offer, the Committee proposes to prevent an offeror from publishing an offer document for 14 days from its firm offer announcement without the consent of the offeree board. Therefore, in the context of a unilateral offer, if the offeree board withheld its consent, it would have 28 days from the date of the firm offer announcement to publish its initial response circular; in turn pushing out the dates for Rule 31.1 and any Day 39 circular.
Reports on post-offer undertakings and post-offer intention statements
The Committee proposes to require offerors and offeree companies to publish reports on post-offer undertakings (currently just at their discretion) and post-offer intention statements given during the course of an offer (currently just private confirmation to the Panel).