On 21 March 2011, the Takeover Panel published a consultation paper seeking views on certain proposed amendments to the Takeover Code.  The proposed amendments substantially mirror the proposals set out in the Takeover Panel's response statement published in October 2010 (see our October 2010 E-Bulletin article: The Takeover Panel proposes certain amendments to the Takeover Code to address concerns regarding "virtual bids" and deal protection measures (including inducement fees)), but a number of aspects have been clarified and some further detail has been provided in the form of draft text. 

Certain of the key points clarified or expanded upon include:

Potential offeror to be identified - the proposed requirement for a potential offeror to be named at the commencement of an offer period or subsequently.  This requirement to name potential offerors is likely to have most impact where there are multiple potential offerors when an offer period commences, especially given the following point on timescales. The Takeover Panel is also seeking views on an alternative approach under which the offeree company would decide whether publicly to identify the potential offeror in relevant circumstances.

28 day "put up or shut up" period - the proposed new timing requirement to oblige any potential offeror to "put up or shut up" by not later than 28 days following the date on which such potential offeror is publicly named (unless that party, in tandem with the offeree company, secures an extension from the Panel or unless another party has separately announced a firm intention to make an offer).  Again, the greatest impact this is likely to have is where there are multiple potential offerors who may be at different stages of considering making a formal offer before they are named but who are (assuming they are named together at the commencement of an offer period) forced onto parallel timetables to make an announcement of a firm intention to make an offer.

Dispensations from deal protection measures - certain suggested dispensations from the proposed general prohibition on deal protection measures and inducement fees have been proposed, including allowing inducement fee arrangements for one "white knight" (in the context of a hostile offer by another party) or where the offeree company is in such serious financial distress that its board is actively seeking an offer. The impact of the prohibition on the use of implementation agreements in the context of schemes of arrangement to implement recommended offers has also been clarified, in terms of certain exemptions being proposed to the new obligation on the offeree company to implement the scheme in accordance with the published timetable.

Statements of intentions to hold true for 12 months - the suggestion that the proposed new requirement, for statements made in offer documents regarding the offeror’s intentions in relation to the offeree company to hold true for at least 12 months following an offer becoming or being declared unconditional, should apply equally to any public statement made by an offeror during the offer period relating to any course of action the offeror intends to take or not take in respect of the offeree company.  The Panel also considers that this concept should, where appropriate, also apply to similar statements made by the offeree company in any circular or announcement issued in the context of an offer.

Responses to the consultation are sought by 27 May 2011.

View the Panel consultation (172 page pdf).

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