Update to the proposals to amend the Takeover Code

Last week, the Takeover Panel published the latest update to the proposals to amend the Takeover Code. These proposals need to be considered by companies and advisers as soon as possible.

In brief, the key points to note are:

1. the Code Committee is still considering the responses to the consultation paper; 
2. the response statement is expected to be released by the end of July;
3. the new takeover regime is expected to be implemented on or around 19 September 2011 (the "Implementation Date");
4. obviously, the new takeover regime will be effected for all offers or possible offers announced after the Implementation Date;
5. however, if an offeree is already in an offer period on the Implementation Date, it will be required, by 5pm on the Implementation Date, to announce the identity of any potential offeror with which it is in talks, or from which it is in receipt of an approach, if, at the commencement of the offer period, it was in talks with or had received an approach from, that offeror;
6. in addition, the offeree will be required to identify any potential offeror to whose existence it has referred in any announcement since the offer period commenced; 
7. in most cases, potential offerors whose identity is announced under the new regime will have a four week period within which to either confirm they do not intend to make an offer, announce a firm intention to make an offer or agree a timetable extension with the offeree and the Takeover Panel; and
8. exclusivity agreements, inducement fee agreements and implementation agreements can be executed in accordance with the current regime up to the Implementation Date, but thereafter will be largely prohibited.

This is something that should be considered by companies that are contemplating making offers, or are already unnamed offerors, as soon as possible. In just over two months' time, if the offeree is in an offer period at that time, the identity of any unnamed offerors is likely to be announced. Potential offerors may also wish to take advantage of the current exclusivity and break fee regime in the narrow window of time available to them.

In addition, offerees should consider the approach that is going to be taken with potential offerors. For example, the announcement in respect of their identity should be discussed with the offerors (since they may withdraw their offer). Offerors are also likely to want to know about the offeree company's approach to agreeing extensions to the automatic four week deadline mentioned in paragraph 7 above.

19 September is likely to be a very busy day for corporate finance advisers, as much of the preparation work as possible should be done in advance. 

Obviously there is a lot of detail that is not in this brief summary. For full details of the update, please click here or alternatively contact a member of our equity capital markets team who will be happy to discuss the Takeover Code amendment proposals with you.