European Investors comments on changes to the UK Takeover Code

European Investors submitted its comments on the Public Consultation Paper of the Code Committee of the Takeover Panel with regard to statements of intention and related matters. The Takeover Panel is the independent body responsible for issuing and administering the Takeover Code in the United Kingdom. The consultation seeked views on important reforms to the way takeovers operate in the UK.

Changes

The proposed changes will require bidders to make earlier and fuller disclosure of their plans for the target company, including its R&D operations, location of its headquarters and skills of its workforce. Also, it would give companies subject to a bid more time to prepare their response and oblige bidders to publish reports on their compliance with the plans they announced during the course of an offer.

General remarks

• We commend the proposed requirement for bidders to publish reports on their compliance with the plans they announced during the course of an offer. However, these statements could be of even more value to investors when they also specify strategic considerations.
• European Investors also supports the amendment which requires an offeror or offeree company which has made a post-offer undertaking always to publish, in whole or in part, any report submitted to the Panel under Rule 19. Such a requirement would provide investors with more valuable information.
• We do not welcome the proposed requirement for bidders to publish an offer document within 14 days following its firm offer announcement. Current time-frames in the Takeover Code are sufficient for well-prepared companies to react.
• European Investors does not support the amendment which would require statements of intention to be made at the time of a bidder’s announcement to make an offer. We disagree that such a requirement is needed to ensure an informed debate among shareholders and other stakeholders.
• We also disagree with the proposed amendment which requires the bidder to make specific statements with regard to the offeree company’s R&D operations, locations of its headquarters. Such a requirement is unclear and too burdensome.

The Takeover Panel

The UK Takeover Panel, based in London, is an independent body which issues and administers the Takeover Code, and supervises and regulates takeovers. Its principal objective is to ensure fair treatment for all shareholder in takeover bids.

Takeovers of publicly listed companies in the UK must abide by the Takeover Code, which sets out an orderly framework for how takeovers must be conducted.

More information

To read our full response, please click here.

For the consultation document, please click here.