The Takeover Code amendments – empowerment in order to shift the balance of power

Year Published: 2011

On 21 March 2011, the Code Committee of the Takeover Panel (“Panel”) produced the long awaited proposed amendments to the Takeover Code (“Code”) as announced in October 2010. The proposed amendments reflect the public consultation paper published on 01 June 2010.

The consultation paper arose as a result of many factors including the hostile takeover of Cadbury by Kraft last year, although the Panel have downplayed these amendments as a “Cadbury Code” and have expressed that the changes are due to market conditions – not as a result of the views expressed by many that “hostile” takeovers had become too easy.

Commentators, including our Corporate team, previously expressed concern that it was too easy for an offeror to, effectively, “lay siege” to target companies for extended periods. The proposed amendments are widely welcomed and considered as a significant step towards a better balancing of power, to give target companies more control over the wanted and unwanted approaches.

The proposed amendments include:
1. Offerors to be held to account for statements of intention;
2. An end to break fees and exclusivity;
3. Visibility on adviser pricing; and
4. Increased employee involvement.

Consultation timetable

Following the 21 March announcement, the consultation period will remain open until 27 May 2011, with the Panel hopeful that the responses received will be positive and agree with the statements made.

We will provide a detailed update of the Code and the amendments on the conclusion of the latest consultation.

For further information contact Jeremy Orrell from our Corporate team on 0844 391 5829.

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Deals roundup

In the first quarter of 2011, our Corporate Group advised on over £151.15m of deals including:
• $220m disposal of Excel Polymers LLC to HEXPOL AB;
• £9m joint venture and private equity fundraising between Areothermal Group and 4Recycling Limited;
• £1m private equity investment into SenseLogix Limited; and
• Instructions received for an IPO on AiM with an admission date in the second quarter of this year.

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