M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Tuesday, February 23, 2010

Takeover Panel to Rewrite Rules?

It seems there may be some blow-back following Kraft's takeover of Cadbury.  Lord Davies, the British Trade Minister and Cadbury's former chairman Roger Carr are suggesting that following Kraft's successful acquisition of British icon Cadbury that the Takeover Panel should make some changes to their rules to ensure this sort of thing doesn't happen again.  Specifically, they suggest:

Among its provisions is a rule that deals must be conditional on at least half of a company’s shareholders accepting the offer.   In his speech earlier this month, Carr said certain changes to the Code may be needed ‘to make hostile bids more difficult to win’. 

He suggested a ‘radical’ change to takeover rules, namely: ‘Raise the acceptance for takeovers above 50%, to dilute the risk of shortterm holders overriding the wishes of a committed longer-term shareholder base by simple majority.’   

This threshold could be lifted to 60%, he argued. Alternatively, Carr said shareholders who buy into a company during a bid could be disenfranchised.

Given that the Takeover Panel has generally taken the position that questions about the ownership of corporations should be left to the stockholders and has eschewed a Delaware-like approach that vests much more power with boards, any move to increase the relative power of boards to resist hostile tender offers is a little disappointing.   Anyway, here's hoping they don't. I like the diversity in approaches.  It gives us academics something to look at!



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