The Takeover Panel has published a consultation paper (PCP 2022/4) proposing various miscellaneous amendments to the Code, including in relation to flexibility regarding targets in financial difficulty, announcement requirements following a "clear public statement", an adjusted mandatory offer price, target board recommendations and directors' intentions, and the disclosure of irrevocable undertakings and letters of intent.
The deadline for responses is Friday 13 January 2023 and the Panel expects to publish a Response Statement setting out the final amendments in "Spring 2023". The amendments would then be expected to come into effect approximately one month after publication of the Response Statement. This alert summarises the more significant of the changes proposed.
Most of the Code changes proposed are essentially technical "housekeeping" points that will be unlikely to impact many offer situations in a material way. The two biggest proposed areas of change are in relation to "rescue" situations involving companies in serious financial difficulties (where the Panel seeks to give itself additional flexibility) and in relation to reversing the presumption that a potential bidder will not need to make an announcement where a target share price move, rumour or speculation follows a public announcement (most commonly of an acquisition by the potential bidder of target shares). Given the high threshold applied by the Panel for when a company is deemed to be in sufficiently serious financial difficulties to merit a "rescue" dispensation, the proposals in that area should not be controversial. Whether the reversal of the announcement presumption affects how potential bidders and their advisers consider the question of whether and when to build a stake in a target company is a more interesting question that - if the changes are effected as proposed - will be worth keeping an eye on.
The key changes being proposed can be summarised as follows.
Flexibility regarding targets in financial difficulty:
The Panel proposes to increase its flexibility to grant a waiver from Code requirements in exceptional circumstances, citing the example of facilitating a rescue of a company in serious financial difficulty. The Panel's general ability to do so is currently constrained by a proviso that "the General Principles are respected". Meanwhile, the Panel's ability to waive the Rule 9 mandatory bid requirement in the context of a "rescue" of a company in serious financial difficulty is subject to either: (a) independent shareholder approval as soon as possible after the rescue is carried out; or (b) the provision of
Announcement requirements following a "clear public statement":
An adjusted mandatory offer price:
Target board recommendations and directors' intentions:
Disclosure of irrevocable undertakings and letters of intent:
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