M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Wednesday, June 2, 2010

Takeover Panel Consultation Paper Released

The Takeover Panel has just released its consultation paper undertaken in the wake of the Kraft acquisition of Cadbury and the ensuing political storm.  You can find it here.  The good news – that although there is pressure on the Panel to adopt a Delaware styled approach, or at least raise barriers to acquisitions, the Panel appears hesitant to move in that direction.

Whilst [the Takeover Panel] seeks to provide an orderly framework in which takeover bids must be made, the Panel does not take, and has never taken, a view on the advantages and disadvantages of takeovers generally or on the commercial or financial merits of particular offers or types of offer. …

However, it’s clear that the Panel is open to the possibility of moving forward on some of the more controversial areas and is seeking additional discussion and comment before making a final determination. 

Given the significance and nature of the issues that have been raised, the Code Committee has chosen to break with its usual practice of setting out specific proposals and proposing drafting amendments to the Code. Instead, on this occasion, the Code Committee is seeking to provide a forum in which suggestions for possible change may be debated.

The Panel’s consultation paper lays out a number of areas in which the Panel wants to continue to receive comment.  And they are:

1)      the 50% plus acceptance condition versus something higher, like 60%;

2)      disenfranchisement of short term shareholders;

3)      reducing the early warning disclosure threshold from 1% to 0.5%

4)      whether buyers should be required to disclosed sources of finance and future plans;

5)      whether shareholders should have access to advice independent of the board with respect to whether or not to accept an offer;

6)      whether to extend the same protections to shareholders of the buyer;

7)      reexamination of the value of the “put up of shut up” regime;

8)      reconsideration of the use of deal protection measures; and

9)      whether safeguards against the substantial acquisition of shares be reintroduced.

The Panel is accepting further comment on these issues until July 27, 2010.



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