Our latest consolidated Public M&A update

We have published an overview of recent developments in public M&A in the UK. It covers recent market activity and the latest developments of interest to public M&A practitioners, including the ruling by the Takeover Panel that a bidder could not invoke a condition to its offer for Moss Bros, and changes to the foreign direct investment regime in the UK.

The update is available here.

Mark Bardell
Mark Bardell
+44 20 7466 2575

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Stephen Wilkinson
Stephen Wilkinson
+44 20 7466 2038

Covid-19 – latest developments for corporate practitioners

Further guidance for companies has been published in light of the Covid-19 pandemic.

Company meetings

  • Shareholder meetings – Relaxations to the company meeting requirements contained in the Companies Act 2006 (as well as the meeting requirements for certain other entities) came into force on 26 June 2020. Under the relaxations, which were made by the Corporate Insolvency and Governance Act 2020, shareholder meetings can take place by electronic or any other means, notwithstanding the provisions contained in the Companies Act 2006 and the company’s articles of association. The participants need not be in the same place and shareholders do not have a right to attend in person. The relaxations apply to company meetings held between 26 March and 30 September 2020. ICSA: The Chartered Governance Institute and the City of London Law Society have published guidance on holding meetings under the Act. The guidance is available to members on The Chartered Governance Institute’s website.

Company filings

  • Temporary extension to filing deadlines The Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020, which were made under the Corporate Insolvency and Governance Act 2020, temporarily extend various filing deadlines under the Companies Act 2006 and other legislation for companies and other entities, including:
    • Accounts: extended by three months, to 12 months for a private company and nine months for a public company. The extension, which is automatic, applies to the original filing deadline. It will not be added to any filing extension already granted by Companies House;
    • Confirmation statement: extended from 14 days to 42 days;
    • Events-driven filings (such as changes in details of directors): extended from 14 days to 42 days; and
    • Charges: extended from 21 days to 31 days.

The longer filing periods apply to filing deadlines that fall between 27 June 2020 and 5 April 2021 (inclusive). Companies House Guidance notes that the revised filing dates can be checked via the Companies House Service.

  • Extension of Companies House upload service – Companies House has extended its temporary upload service (see our corporate update 2020/13) to enable companies to file articles of association and related forms and resolutions online, rather than in paper format. The list of documents and forms which can now be uploaded using this service is available here.

Insolvency regime and directors’ duties

As well as relaxing the requirements for company meetings and allowing extensions to the filing deadlines for certain documents, as discussed above, the Corporate Insolvency and Governance Act 2020 has also made changes to the insolvency regime in the UK. The changes include:

  • Suspension of wrongful trading – When determining what contribution, if any, a director should make to a company’s assets following a finding of wrongful trading, the court must assume that a director is not responsible for any worsening of a company’s financial position between 1 March 2020 and 30 September 2020.
  • Ipso facto (termination) clauses – Contractual clauses permitting a supplier of most goods or services to terminate supply as a result of the customer’s entry into an insolvency procedure will cease to have effect.
  • Winding up petitions – Winding up petitions cannot be presented if based on statutory demands dated 1 March 2020 to 30 September 2020. Creditors will also be prevented from winding up a company unless the creditor has reasonable grounds to believe that Covid-19 has not had a financial effect on the company.
  • New company moratorium – A new moratorium is available for companies, which will give a company up to 40 business days of protection from creditors, without court or creditor approval. The moratorium prevents legal processes against the company, including commencing insolvency proceedings and crystallising a floating charge.
  • Restructuring plan – This new form of restructuring, similar to a scheme of arrangement, allows the court to impose a compromise on a company’s creditors and shareholders, including a cross-class cram-down.

We have previously published briefings on the impact for supply chains, landlords, banks and pension scheme trustees.

Other relevant materials

  • ESG – Corporate purpose and environmental, social and governance (ESG) issues dominated headlines in the months leading up to the Covid-19 outbreak. The intense public scrutiny of corporate conduct, governance and investment behaviours during the pandemic has served to accelerate the conversation around ESG issues. To help make sense of this new paradigm, we have published a guide in which we set out some of the ways in which Covid-19 is impacting the key ESG considerations confronting businesses, asset managers, asset owners and lenders.
  • Investment and acquisition opportunities – We expect the crisis to operate as a catalyst for change. As we transition to a new normal, there will be opportunities for those with access to capital and a desire to invest or participate in industry consolidation. In our latest guide we look at possible options and issues for those looking to invest.
  • Land Registry and electronic signatures – The Land Registry has issued draft practice guidance setting out the basis on which it will accept electronic signatures. The consultation closes on 18 July 2020 and the final practice note will be issued in the “next few weeks”.
  • Service of proceedings – The High Court has set aside default judgment obtained against a defendant Council where the claim form and particulars were posted to its offices shortly after the start of the Covid-19 lockdown. For further information, see our Litigation Notes blog post.

For further Covid-19 related publications, see our COVID-19 Hub.

Mark Bardell
Mark Bardell
+44 20 7466 2575

Sarah Hawes
Sarah Hawes
+44 20 7466 2953

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Public M&A Podcast Series Episode 4: Conditions to an offer and when a condition can be invoked

In our latest public M&A podcast, Mark Bardell and Antonia Kirkby discuss conditions to a takeover offer and in particular:

  • what the UK Takeover Panel will allow bidders to include as a condition to an offer; and
  • when it will allow a bidder to invoke a condition to an offer, in particular a “material adverse change” condition or MAC.

This is topical because of the recent ruling by the Panel that a bidder was not permitted to invoke a MAC condition to an offer – the bidder for Moss Bros wanted to terminate its bid because of the impact the Covid-19 pandemic but the Panel would not let it do so.

To listen to the full conversation please visit SoundCloud, Spotify or iTunes.

For our previous episodes on:

  • formal sale processes, click here;
  • standards of disclosure on public M&A, click here; and
  • statements of intention, click here.
Mark Bardell
Mark Bardell
+44 20 7466 2575

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Amendments to UK merger control regime targeting foreign investment

The UK government has announced two amendments to the UK merger control regime, which will enhance its powers to scrutinise certain foreign direct investment (FDI) into the UK, against the backdrop of the Covid-19 pandemic and wider national security concerns.

These amendments come ahead of the National Security and Investment Bill, which is expected to be brought before Parliament in the coming weeks to create a new distinct FDI regime in the UK.

Under the changes:

  • Businesses involved in the response to a pandemic – The grounds on which the government can intervene in a transaction on public interest grounds under the Enterprise Act 2002 have been expanded to include “to combat and mitigate the effects of a public health emergency”. This change was introduced by The Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order which took effect on 23 June 2020. The reforms cover not only companies directly involved in the response to a pandemic (e.g. pharmaceutical or medical equipment suppliers), but also companies which mitigate its effects (examples given include internet service providers and food supply companies); and
  • Artificial intelligence, cryptographic authentication technology and advanced materials – The jurisdictional thresholds for transactions in these sectors will be lowered so that the government will be able to intervene in more transactions. These changes will be implemented by way of two statutory instruments: the Enterprise Act 2002 (Share of Supply Test) (Amendment) Order and the Enterprise Act 2002 (Turnover Test) (Amendment) Order 2020, which is yet to be published. The orders will come into force once they have been debated.

Our competition, regulation and trade team has published a more detailed ebulletin on the changes which is available here.

Mark Bardell
Mark Bardell
+44 20 7466 2575

Gavin Davies
Gavin Davies
+44 20 7466 2170

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Draft Regulation for the takeover exemption

The European Commission has published for consultation a draft Delegated Regulation and Annex setting out the information that companies must disclose in an “exemption document” when relying on the exemption under the Prospectus Regulation from the requirement to publish a full prospectus when offering securities in connection with a takeover (PR Art 1(4)(g)).

Under the draft Regulation the exemption document will have to contain the relevant information which is necessary to enable investors to understand:

  • the prospects of the issuer and the target company;
  • the rights attaching to the equity securities; and
  • the description of the transaction and its impact on the issuer.

As was the case under the Prospectus Directive, the amount of disclosure required under the exemption is not significantly reduced compared to a prospectus and it remains to be seen to what extent bidders will take advantage of it.

The consultation closes on 14 July 2020.

Sarah Hawes
Sarah Hawes
+44 20 7466 2953

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Greg Mulley
Greg Mulley
+44 20 7466 2771

Takeover Panel ruling on bid conditions

The Takeover Panel has refused to allow a bidder to invoke a condition to its takeover offer in light of the COVID-19 pandemic.

Brigadier Acquisition Company Limited (the bidder) announced its firm intention to make an offer for Moss Bros Group plc (the target) on 12 March 2020. On 22 April 2020, citing the impact of the COVID-19 pandemic, and the related Government measures, the bidder lodged a formal submission with the Panel Executive setting out the reasons why it believed that it should be permitted to invoke certain conditions (including the no material adverse change condition) to completing its offer.

On 19 May 2020, the Panel Executive ruled that the bidder had not established that the circumstances were of material significance to it in the context of its offer (as required by Rule 13.5 of the Takeover Code) and as such, the bidder should not be permitted to invoke any of the conditions.

Following the Panel Executive’s ruling, the bidder requested a review of the ruling but subsequently withdrew that request.

Mark Bardell
Mark Bardell
+44 20 7466 2575

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Robert Moore
Robert Moore
+44 20 7466 2918

COVID-19 – Practical issues around signing and completion

Given the current restrictions on interaction which have been imposed by the UK Government and with a large number of people working from home, it is not always possible to adopt the usual methods for signing and completing deals. We have summarised some practical points to ensure compliance with the necessary legal formalities whilst these measures remain in place.

Briefing available here.

Continue reading

Video published – COVID-19: implications for new M&A deals

Gavin Davies has published a video for Practical Law in which he outlines how the COVID-19 pandemic is affecting new M&A activity in the UK and Europe, including its impact on levels of M&A activity, the practical challenges of conducting M&A while the pandemic continues, how deal processes are adapting, and the response of (and impact on) other market participants such as banks, insurers and regulators.

The video covers:

  • anticipated impact of COVID-19 on new deals;
  • practical difficulties in progressing deals;
  • impact on M&A deal processes and structures;
  • availability of debt finance and W&I insurance; and
  • impact on merger control and FDI restrictions.

Click here to access the video on Practical Law’s website (free-to-view for the next 7 days and then available to Practical Law subscribers).

Video published – COVID-19: implications for live M&A deals

Caroline Rae has published a video for Practical Law in which she considers the impact of the COVID-19 pandemic on in-flight M&A transactions that had exchanged but not completed before the pandemic took hold in the UK and Europe.

The video covers:

  • impact on private M&A transactions;
  • buyers’ rights to terminate;
  • impact on public M&A transactions;
  • practical challenges; and
  • lessons learnt.

Click here to access the video on Practical Law’s website (free-to-view for the next 7 days and then available to Practical Law subscribers).