The existing framework for the regulation of statements governing a bidder's intentions for a target and its business was introduced to the City Code on Takeovers and Mergers in January 2015. This framework distinguishes between:

  • "post-offer intention statements" – statements relating to any particular course of action that a bidder intends to take, or not take, after the end of the offer period, which must be accurate statements of its intentions at the time that they are made and based on reasonable grounds; and
  • "post-offer undertakings", – statements relating to any particular course of action that a bidder commits to take, or not take, after the end of the offer period and with which it is required to comply for a stipulated time unless an exception applies.

On December 11 2017 the panel published Response Statement 2017/2 to its September 2017 consultation on statements of intention and post-offer undertakings (PCP 2017/2). The resulting amendments to the code set out in this response statement took effect on January 8 2018.

Statements required in offer document

Rule 24.2(a) of the code requires a bidder to explain, in the offer document, the long-term commercial justification for the offer. Specifically, a bidder must state its intentions with regard to the target's future business, the continued employment of the target's employees and management and its strategic plans for the target and likely repercussions on employment and the locations of the target's places of business.

Following its September 2017 consultation, the panel concluded that a bidder must also state:

  • its intentions for the target's research and development functions;
  • its intentions regarding any material change in the balance of the skills and functions of the target's employees and management; and
  • the likely repercussions of its strategic plans on the location of the target's headquarters and headquarters functions.

The panel observed that a bidder may wish to state that they will review the target's business after completion of the offer. However, such a statement will not, on its own, satisfy the Rule 24.2 requirements. The panel noted that the bidder should disclose the scope of the review and the bidder's expectations relating to the review.

Statements required in offer announcement

The panel has introduced a new requirement that a bidder states, in its firm offer announcement, its intentions relating to the business, employees and pension schemes of the target and the bidder (as required by Rule 24.2 in the offer document).

The purpose of this new requirement is to enable shareholders, employee representatives, pension scheme trustees and other stakeholders to hold an earlier and more informed debate as to the offer and the bidder's intentions.

Delayed publication of offer document

The panel has amended the code to prevent a bidder from publishing an offer document for 14 days after its firm offer announcement without the target board's consent.

The purpose of this amendment is to provide the target board with more time (particularly where the bid is hostile) to formulate its opinion, reasons and views on the offer and the bidder's strategic plans for the target (as required by Rule 25.2) and prepare its defence (if any) against the offer.

The panel noted that a bid conduct agreement or any similar agreement between the parties must not include an agreement by the target board to waive such restriction. However, it would be permissible for a firm offer announcement to state that the target board has consented to the publication of the offer document for the purposes of this new restriction.

Confirmation of post-offer intention statements

The panel has introduced Rule 19.6(c), requiring a bidder (or a target) who has made a post-offer intention statement to provide a written confirmation to the panel of whether it has taken the course of action set out in such statement at the end of 12 months from the date on which the offer period ends (or any other specified period). Such confirmation will have to be published via a Regulatory Information Service provider.

Report on post-offer undertakings

Under Rule 19.5(h), if a bidder or a target makes a post-offer undertaking, such party must submit written reports to the panel on such undertaking. Previously, the panel had the discretion to determine whether such a report should be published.

The panel has now amended Rule 19.5(h) to state that such a report (in whole or in part, as required by the panel) should be published in all cases. Specifically, where a post-offer undertaking is for a period longer than a year, such a report will have to be published at least annually.

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For further information on this topic please contact Will Pearce or William Tong at Davis Polk & Wardwell London LLP by telephone (+44 20 7418 1300) or email ( or The Davis Polk & Wardwell website can be accessed at