A number of changes have been made to the UK Takeover Code (the Code) with effect from 19 September 2011.  The amendments have been made in response to a review of the Code undertaken following the takeover of Cadbury plc by Kraft Foods Inc in 2010. 

Among the key changes are the following:

  • Where a target announces the existence of a possible offer or that it is seeking potential bidders, the announcement (unless the UK Panel agrees otherwise) must now state the identity of every potential bidder with whom the target is in discussion or from whom the target has received (and not rejected) an approach.
  • A "put up or shut up" deadline of 28 days is now automatically imposed on potential bidders following a possible offer announcement (or the announcement by a target identifying the potential bidder), within which period the potential bidder must either make an announcement of its firm intention to make an offer or of its intention not to make an offer.  Previously, the target could ask the UK Panel to impose such a time limit on the bidder to "put up or shut up" but no automatic deadline applied. 

Here in Ireland, the Irish Takeover Panel is currently running consultations on a number of possible changes to the Irish Takeover Rules, and the "put up or shut up" mechanism is one area in relation to which the Irish Panel is inviting submissions. The Irish Panel is not proposing to follow the UK introduction of a fixed 28-day deadline by which the bidder must "put up or shut up", but rather it is proposing to amend Irish Rule 2.4 to enable it to impose such a deadline should it wish to do so.

  • The practice of entering into "offer-related arrangements" with the target during the offer period, or when an offer is reasonably in contemplation, will now be prohibited, subject to a number of exceptions (including where the UK Panel grants a dispensation, for example to permit an inducement fee arrangement with one or more "white knights" in the case of a hostile bid).  "Offer-related arrangements" will normally include break (or inducement) fee arrangements and implementation agreements, and (it would seem from the UK Panel's consultation papers on the proposed changes and from commentary in the UK on the point) are likely to also include undertakings by the target to limit the information passed to competing bidders, non-solicitation undertakings on the part of the target in respect of soliciting competing bids, and undertakings by the target to inform the bidder of any other approach and allow it to match or top any competing bid, among others.

The Irish Panel is not currently proposing, at least in the consultations currently open for submission, to adopt similar changes in Ireland.

  • New provisions will now require the bidder to disclose full financial information about it, irrespective of whether the offer is a wholly cash offer or otherwise. Previously, less detailed information was required where the offer was wholly in cash. Financial results will however be able to be incorporated by way of reference.
  • Under the new provisions, a bidder will now be required to comply, for a period of 12 months or such shorter or longer period as might be specified, with any statements of intention made by it in relation to any course of action which it intends to take, or not to take, after the end of the offer period with regard to the target, unless there is a material change of circumstances (which phrase is not expressly defined).

Again, the Irish Panel is not currently proposing any similar change to the Irish Takeover Rules with regard to compliance with statements of intention.  

For a link to the amended Code, please click here.

See links to Irish Panel's open consultation papers (the consultation periods relating to which being due to close on 7 October 2011), below:

Consultation Paper 1 

Consultation Paper 2