The Takeover Panel has embarked on a consultation process in relation to significant proposed changes to the Takeover Code.  These changes have been driven primarily by a concern that offerors have, in recent times, been able to obtain a tactical advantage over an offeree company to the detriment of the offeree company and its shareholders.  The changes are primarily aimed at "hostile" offerors, but are also likely to impact on the manner in which recommended offers are implemented.

Amendments have been proposed to the Code in order to:

  1. increase the protection for offeree companies against protracted "virtual bid" periods by requiring potential offerors to be named and further requiring such named offerors either to announce a firm intention to make an offer or announce that they do not intend to bid within a short period of time (usually within four weeks of being named);
  2. strengthen the position of the offeree company by:
    • prohibiting deal protection measures and inducement fees other than in certain limited cases (including for the benefit of a "white knight" or where the offeree is, through an auction process, actively seeking an offer to be made for it); and
    • clarifying that offeree company boards are not limited in the factors that they may take into account in giving their opinion and recommendation on an offer;
  3. increase transparency by:
    • improving the quality of disclosure by offerors and offeree companies in relation to the offeror's intentions regarding the offeree company and its employees (with statements expected to hold true for at least one year unless another period is stated); and
    • improving the ability of employee representatives to make their views on the offer known.

For further information, see:  www.thetakeoverpanel.org.uk/wp-content/uploads/2008/11/PCP201101.pdf